Tech Billionaires Including Peter Thiel to Establish Banking Platform for Crypto and Artificial Intelligence Ventures

Technology entrepreneur Peter Thiel, who co-founded PayPal, alongside a group of fellow tech billionaires, is collaborating to create a new banking institution designed to replace the failed cryptocurrency-focused Silicon Valley Bank, according to a Financial Times report citing informed sources.

Palmer Luckey, who co-founded defence technology company Anduril, is spearheading efforts to launch this commercial banking venture named Erebor, with backing from Palantir co-founder Joe Lonsdale and Thiel’s investment vehicle Founder Fund, the Monday report revealed.

The Financial Times indicated that Erebor has submitted an application for a national banking charter through the Office of the Comptroller of the Currency, the federal banking oversight body.

Similar to SVB’s business model, Erebor intends to cater to venture capital-supported startups that face rejection from established banking institutions, the publication noted. These clients would encompass technology enterprises specialising in artificial intelligence, defence contracting, manufacturing, and digital currencies, according to the FT’s review of Erebor documentation.

Silicon Valley Bank operated as a major commercial lender serving numerous cryptocurrency businesses, including BlockFi, Circle and Avalanche, alongside various venture-funded companies. The institution collapsed in March 2023 following poor investment decisions in low-yield securities and other financial miscalculations that left it vulnerable during a customer exodus triggered by its technology-focused client base. The bank’s failure represented the second-largest institutional collapse in American banking history.

Erebor will operate under dual leadership with co-CEOs Owen Rapaport, who co-founded software company Argus, and Jacob Hirshman, previously an adviser to Circle, the FT reported.

The publication revealed that Erebor intends to incorporate stablecoins into its financial holdings, though which specific dollar-backed tokens would be selected remains undetermined.

Representatives for the parties allegedly connected to Erebor have not yet responded to Decrypt’s enquiries for comment. The bank shares its name with a mountain from J.R.R. Tolkien’s fantasy literature.

Erebor’s establishment coincides with expectations of significant growth in digital assets under U.S. President Donald Trump’s administration, given his strong connections to the cryptocurrency sector.

During Trump’s presidency, Congressional representatives have enacted the Genius Act, establishing regulatory guidelines for stablecoins that significantly benefits the digital assets ecosystem. Additionally, market structure legislation designed to facilitate cryptocurrency companies’ domestic operations is anticipated to pass into law before year’s end.

Concurrently, Bitcoin’s value – frequently regarded as an indicator of cryptocurrency market health – reached two record peaks within months of President Trump taking office.

The positive developments within cryptocurrency markets and legislative chambers have driven increased merger and acquisition activity throughout the industry, alongside a surge in crypto-related initial public offerings.