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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.
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.
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.
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.
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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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: mark reinstein on Shutterstock.com
