In brief
- Erebor became the first crypto bank to win a conditional federal charter under the Trump administration, and only the second ever after Anchorage Digital.
- Backed by Palmer Luckey and the firms of Joe Lonsdale and Peter Thiel, Erebor will soon likely join Anchorage in having certain advantages regarding the issuance of stablecoins under the recently passed GENIUS Act.
- Other major crypto players including Coinbase, Stripe, and Circle have also applied for their own bank charters in recent months.
A key agency within the Treasury Department granted a conditional bank charter Wednesday to a crypto-focused bank for the first time under the current Trump administration, and only the second time ever, in a move likely to disrupt the exploding stablecoin sector.
The Office of the Comptroller of the Currency today conditionally approved a bank charter application for Erebor, a crypto-focused bank with ties both to Silicon Valley’s most powerful players and President Donald Trump.
The bank, named after the “Lonely Mountain” containing the dragon Smaug in The Lord of the Rings series, is backed by weapons manufacturer Palmer Luckey and the firms of Palantir co-founders Joe Lonsdale and Peter Thiel. Luckey and Lonsdale were two of Silicon Valley’s most prominent Trump boosters in the 2024 election; Thiel has long been a close backer of Vice President J.D. Vance.
Over the next few months, Erebor will have to comply with certain auditing and security requirements before it is allowed to officially open and begin serving customers.
But today’s approval, even if conditional, is nonetheless significant. It makes Erebor the only crypto-focused bank to ever receive a federal charter besides Anchorage Digital, which has long marketed itself as the only American crypto bank to hold such privileges. As of writing, Anchorage’s website still touts the institution as “the only federally chartered crypto bank in the U.S.”
A federal bank charter allows an institution to operate nationally, accept deposits, and make loans, among other privileges. In the wake of the passage of the stablecoin-focused GENIUS Act, it could also put an institution at a key first-mover advantage when it comes to issuing such tokens, according to Anchorage CEO Nathan McCauley.
“With GENIUS, it became Willy Wonka’s golden ticket,” McCauley said of Anchorage’s bank charter at a recent press event. “It is like the coolest charter in the country now, because it allows you to issue stablecoins in a way that no other kind of entity can.”
The GENIUS Act, signed into law in July, established a legal framework for issuing and trading stablecoins in the United States. Stablecoins act as digital dollar equivalents in digital markets, and thus allow users to both enter and exit digital asset trades and send payments overseas without accessing dollars directly.
Stablecoins have become a lucrative business in recent years, and the sector is poised to grow significantly following the GENIUS Act’s passage. The stablecoin market’s value currently eclipses $312 billion, and users on Myriad—a prediction market developed by Decrypt’s parent company DASTAN—currently believe there’s a 68% chance the market grows past $360 billion by February 2026.
Since GENIUS’ passage, Anchorage has dominated the burgeoning American stablecoin ecosystem, signing on as issuer of market leader Tether’s new U.S.-dedicated stablecoin, USAT, as well as other similar products.
Anchorage now appears to have some well-heeled competition. Erebor, which is reported to have secured upwards of $250 million in funding, told the OCC in its bank charter application that it seeks to become “the most regulated entity conducting and facilitating stablecoin transactions.”
The bank also intends to offer credit products, deposit products, treasury management, credit card issuance, and payment services.
In recent months, other major crypto players including crypto exchange Coinbase, payments processor Stripe, stablecoin issuer Paxos, and USDC issuer Circle have all lined up for bank charters, seeking to earn similar advantages. Earlier today, Sony submitted its own bank charter application to, among other things, issue stablecoins.
At last month’s press event, Anchorage’s McCauley emphasized that, even under the new, particularly crypto-permissive Trump administration, he believed it would take quite some time for any other bank to earn a bank charter. Such approvals are notoriously difficult to receive, given the immense privileges they grant their holders, and the potential risks they can bring to the American banking system.
McCauley predicted it would likely take any crypto rival around a year and a half to earn such a charter.
“Getting bank charters is super hard,” he said. “I think it’s going to be quite some time.”
It took Erebor just four months.
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