New US bank backed by billionaires aims to fill crypto void left by SVB

A new bank backed by Anduril’s Palmer Luckey and 8VC’s Joe Lonsdale could become crypto’s next big lifeline in the U.S. following the fall of Silicon Valley Bank.

Table of Contents

• Why SVB mattered to crypto
• What happened after SVB fell
• Enter Erebor
• What this means for crypto

A group of well-known tech investors is launching a new U.S. bank called Erebor, aiming to fill a void left by Silicon Valley Bank, especially for start-ups and crypto companies that have struggled to find the same kind of support since SVB collapsed in 2023.

According to a Financial Times report, the new project is being led by Palmer Luckey, founder of military tech firm Anduril, and Joe Lonsdale, founder of venture firm 8VC and co-founder of Palantir. People familiar with the matter add that the bank is backed by several big-name investors, including Founders Fund, the venture capital firm associated with Peter Thiel.

Erebor has already filed for a national bank charter in the U.S., a move that would allow it to operate as a full-service bank across the country.

The bank’s plan is to serve companies working in areas like crypto, artificial intelligence, and defense. It also aims to support individuals involved in those industries, as well as overseas firms looking for access to the U.S. financial system. For crypto, this could be big news.

Why SVB mattered to crypto

Before it collapsed, SVB played a major role in the crypto world. It wasn’t a “crypto bank” in the way Silvergate or Signature was, but it had become a key partner to many crypto startups. It offered banking services to companies that were often too risky for traditional lenders.

That included early-stage crypto firms, blockchain infrastructure projects, and some venture capital funds focused on digital assets. SVB also worked with stablecoin issuers.

For example, Circle, the firm behind the USD Coin (USDC) stablecoin, held a significant portion of its reserves at SVB. So when SVB went under in March 2023, it sent shockwaves through the crypto market.

For a brief time, USDC even lost its dollar peg because Circle’s funds were stuck at the failed bank. That event raised serious questions about the safety and stability of crypto’s link to the traditional banking system. While Circle eventually got its money back and the peg recovered, the episode exposed just how fragile that connection could be.

What happened after SVB fell

After SVB’s collapse, its assets were sold to First Citizens Bank, which later relaunched SVB. Some of SVB’s staff ended up at HSBC, which tried to build its own version of a startup-focused bank. But many in the tech and crypto scenes say that nothing has fully replaced what SVB offered.

Startups — especially riskier ones — have found it harder to get access to credit. Some crypto firms have turned to fintech alternatives, but others have struggled to find stable banking partners at all. U.S. regulators have also taken a stricter stance on crypto-banking ties since early 2023, which hasn’t helped.

Enter Erebor

That’s where Erebor comes in. Its founders say the bank will focus on what they call the “innovation economy.” According to its public application, it wants to serve businesses and individuals who feel “underserved” by both traditional banks and newer fintechs. That includes those who’ve had trouble accessing credit or finding stable banking partners.

One major focus is expected to be stablecoins. Erebor says it wants to be the “most regulated entity conducting and facilitating stablecoin transactions.” That could potentially be appealing to companies like Circle or other stablecoin projects looking for trusted U.S. banking infrastructure.

Still, it’s not clear exactly how Erebor will approach regulation or how far its crypto services will go. The full details of its business plan haven’t been made public, and some of the application has been filed confidentially.

It’s also worth noting that the bank won’t be run by its headline investors. Day-to-day operations will be led by Jacob Hirshman, a former adviser at Circle, and Owen Rapaport, who previously ran a digital asset compliance company. The bank’s president will be Mike Hagedorn, a longtime executive from Valley National Bank. Erebor will be based in Columbus, Ohio, with another office in New York, but will operate digitally only, offering services via app and website.

What this means for crypto

It’s too early to say whether Erebor will truly become the next SVB. Regulators still need to approve the bank charter. And the crypto industry’s relationship with U.S. banks is still tense.

But if Erebor gets the green light and follows through on its crypto plans, it could become an important new player, one willing to work with the kinds of firms that other banks still shy away from. At the very least, crypto founders and investors will likely be watching closely.

For now, Erebor represents a possible path forward in a post-SVB world, a space many still feel is missing from the banking landscape.