- Erebor would like to have fast OCC approval through the political connections.
- There are high expectations that the crypto banking charter will be quick owing to regulatory connections.
Erebor, a crypto-centric bank that has attracted the support of Silicon Valley names, says it will obtain regulatory permission in a shorter time than expected. The fundraising memo of the bank states that this will be done through the political network. Its main founders, Palmer Luckey, Peter Thiel, and Joe Lonsdale, are all Republicans who have connections to regulators.
Erebor’s Bold Timetable to Beat Regulatory Norms
Bank charters usually take a year or more. Erebor will acquire an OCC charter in a period of under six months. This is based on Luckey’s political contributions, which totaled more than one million dollars in the previous year, mainly to GOP politicians.
A unique relationship between one of its founders and the freshly sworn-in Comptroller of the OCC, J.Gould, is highlighted in the memo. Gould served in the first administration of Trump and in the bitcoin mining company Bitfury.
This close regulator connection raises questions about expedited approval. The OCC states that it uses rigorous procedures but fails to admit that Erebor might receive any special treatment.
Tech and Politics Merge in Erebor’s Strategy
Anduril, who is also named Luckey, Thiel, who is also named Palantir and PayPal, and Lonsdale, who is also named Palantir, are all named, respectively, in the memo. All support Trump’s 2024 campaign financially. The venture firm of Thiel, Founders Fund, is an investor in Erebor, but does not participate in its operations.
Gould’s appointment is significant. His crypto-industry background might ease approvals for fintech banks. One of the former lawyers of Erebor, Adam Cohen, became the chief counsel of Gould, which makes Erebor closely tied to the regulatory leadership.
Erebor Aims to Bridge Crypto and Traditional Finance
Erebor targets startups in crypto, AI, defense, and manufacturing. The bank will be highly regulated as it provides stablecoin transactions. It provides custody and settlement of digital assets and cross-border banking customers.
The business strategy of Erebor is similar to that of Silicon Valley Bank except that it targets innovation-oriented industries. It promises to be very compliant with regulations, but accommodative of the emerging crypto landscape.
Approval Speed: Ambitious or Practical?
Analysts indicate that full approval takes about nine months to a year. Erebor’s six-month goal is aggressive. Preliminary approvals and FDIC insurance often extend timelines.
Other fintech banks, such as Varo and SoFi, had to spend years and substantial investments to acquire charters. Erebor’s political connections might compress these timelines.
What Erebor’s Success Means for Crypto Banking
Provided that it is ratified swiftly, Erebor would redefine crypto banking at the federal level. It also seeks to develop a compliant digital asset service platform supported by key technology investors.
Nonetheless, politics in regulatory approval is a cause of concern. Bias may also influence the notion of fairness in financial innovation.
