Digital bank Erebor raised $350 million with a valuation of $4.35 billion, driven by preliminary approvals from the OCC and FDIC amid rising demand for AI-powered cryptocurrency banking services.
Erebor , the digital bank co-founded by tech entrepreneur Palmer Luckey and backed by billionaire Peter Thiel, has reached a post-investment valuation of $4.35 billion after completing a $350 million Capital round led by Lux Capital. According to sources from Axios, this valuation milestone reflects the strong market demand for banking models tailored to clients operating in the cryptocurrency, artificial intelligence, and stablecoin sectors.
The main driver behind this impressive valuation stems from positive legal developments. Erebor recently received conditional preliminary approval from the U.S. Office of the Comptroller of the Currency, a key hurdle on its path to becoming a fully licensed bank. Last week, the company's deposit insurance application was also approved by the Federal Deposit Insurance Corporation with a 12-month validity period, providing a solid legal foundation for its business operations.
The latest Capital round attracted participation from a wide range of investors, including existing funds such as Founders Fund, Haun Ventures, and 8VC, along with new entrants. This enthusiasm reflects growing expectations for financial institutions capable of integrating traditional banking services with modern digital asset infrastructure.
Filling the void after the Silicon Valley Bank crisis.
Palmer Luckey, who was first known as the founder of Oculus VR before its acquisition by Facebook and later co-founded Anduril Industries in the defense sector, has brought Erebor out of secrecy by mid-2025. This move is XEM as a response to the serious gaps in the banking system for tech startups and cryptocurrency businesses, particularly following the collapse of Silicon Valley Bank in March 2023.
The bankruptcy of SVB, one of the largest bank failures since the 2008 financial crisis, left a huge void as the bank had been a key partner to thousands of technology companies backed by Venture Capital . The wave of withdrawals triggered by the erosion of long-term portfolio value due to rapidly rising interest rates deprived many businesses of a reliable source of banking services.
Erebor is not alone in the race to enter the digital asset banking sector. Coinbase exchange, stablecoin issuer Circle , and payment company Ripple Labs are also seeking national trust charter licenses or equivalent approvals from the OCC. Their common goal is to expand custody and settlement services for digital assets, while connecting traditional financial infrastructure with on-chain finance.
This wave of licensing applications is occurring against the backdrop of the US accelerating its efforts to clarify the legal framework following President Donald Trump's inauguration. This shift includes the passage of key laws on stablecoins and the long-awaited cryptocurrency market structure bill.
David Sacks, who has been appointed “crypto and AI czar,” said the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission are expected to issue clear regulatory guidance for crypto assets, bolstering confidence in a more transparent and favorable regulatory framework for the digital asset industry.
