Erebor Bank, a new crypto-focused financial institution backed by prominent tech investors Peter Thiel, Palmer Luckey, and Joe Lonsdale, received preliminary conditional approval for a national bank charter on Wednesday.
OCC Approves Crypto-Friendly Erebor Bank
The Office of the Comptroller of the Currency (OCC) approved the Columbus, Ohio-based bank after what it called a “thorough review,” establishing a potential path for federally regulated banks to engage with digital assets.
The decision marks a significant development for the banking and crypto sectors. Comptroller of the Currency Jonathan V. Gould emphasized that the approval does not represent a blanket barrier for innovative financial services.
"Permissible digital asset activities, like any other legally permissible banking activity, have a place in the federal banking system if conducted in a safe and sound manner," Gould said in a statement released on wednesday. Erebor is the first de novo bank to receive preliminary approval under Gould's tenure.
OCC Approval Allows Erebor To Hold Limited Virtual Currencies
According to its application, the proposed bank will be a full-service institution targeting “technology companies and ultra-high-net-worth individuals that utilize virtual currencies”.
It also received approval to hold limited amounts of non-asset-backed virtual currencies on its balance sheet to pay for network transaction fees, commonly known as “gas fees.”
The venture brings together a powerhouse of tech investors. According to the approval document, Luckey is listed as a Director and Principal Shareholder. Whereas, a report from July stated that Lonsdale, founder of venture capital firm 8VC and co-founder of Palantir Technologies Inc. (NYSE:PLTR), along with Thiel‘s Founders Fund, has also provided financial backing to the project.
Banks Needs To Maintain Specific Requirements For Final Approval
The approval, however, is not final. The OCC letter repeatedly stresses that it is a "preliminary conditional approval" and the bank cannot open until all pre-opening requirements are satisfied. The conditions are strict, including a requirement for Erebor to maintain a minimum 12% Tier 1 Leverage ratio for its first three years of operation.
The bank was reportedly conceived to fill a market void for tech and crypto startups following the collapse of Silicon Valley Bank in 2023. Following a merger with its organizing entity, Erebor Group, Inc., the bank will operate without a holding company.
Price Action
The S&P 500 index ended 0.40% higher at 6,671.06 on Wednesday, whereas the Nasdaq 100 index advanced 0.68% to 24,745.36. On the other hand, Dow Jones fell 0.037% to 46,253.31.
On Thursday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading in a mixed manner.
Meanwhile, Bitcoin (CRYPTO: BTC) was trading 1.25% lower at $111,047.30 per coin.
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