Tech Giants Join Forces to Create New Financial Institution, Filling the Void Left by the Collapse of Silicon Valley Bank

The collapse of Silicon Valley Bank in 2023 brought a huge shock to the fintech sector, while also leaving a service gap that urgently needs to be filled. Now, a new battle aimed at reshaping the financial landscape is quietly unfolding.

According to reports, a new type of Financial Institution named Erebor is being prepared with the joint efforts of several tech giants. These giants include tech billionaire Joe Lonsdale, virtual reality technology pioneer Palmer Luckey, and renowned investor Peter Thiel, among others.

The name Erebor comes from the "Lonely Mountain" in "The Hobbit," which is rich in treasures. This may symbolize the grand objective of the institution: to provide "treasure-like" financial services for emerging technology companies in the "desert" of traditional finance.

It is reported that Erebor not only targets the service gap left by Silicon Valley Bank for technology companies but also positions stablecoins as a core strategy. Its goal is to become "the most regulated entity for conducting and promoting stablecoin transactions," which indicates that the integration of traditional finance and cryptocurrencies will enter a new phase.

The Service Gap After the Collapse of Silicon Valley Bank

Silicon Valley Bank was once the preferred bank for American technology startups and the venture capital community, providing comprehensive services to many startups deemed "high-risk" by traditional large banks. It covered almost every stage of growth for technology companies, from deposits and loans to investment banking. It was deeply integrated with Silicon Valley's entrepreneurial ecosystem and became an important financial partner for many innovative companies from incubation to IPO.

However, due to excessive concentration on technology sector clients, a misjudgment of the Federal Reserve's interest rate hike cycle leading to significant unrealized losses, and the speed and scale of bank runs in the social media era, it ultimately triggered a liquidity crisis in March 2023.

Despite the swift actions taken by the U.S. government to protect depositors, traditional large banks have generally adopted a cautious stance towards technology, especially startups in the high-risk areas of crypto and AI, following the collapse of Silicon Valley Bank. This has led to a noticeable "vacuum" in financial services in the market. Finding a new financial partner that understands and supports their development has become an urgent priority.

Erebor: The Ambitious Creation of a Tech Giant

The lineup of initiators for Erebor is luxurious, including:

1. Palmer Luckey: Founder of the virtual reality headset company Oculus VR, which he sold to Facebook (now Meta) for a high price of $2 billion. He then transitioned to defense technology and co-founded Anduril Industries in 2017, a company focused on providing advanced AI-driven unmanned systems, sensors, and surveillance technologies for the United States and its allies.

2. Peter Thiel: A Silicon Valley legend with multiple identities: co-founder of a well-known payment company, co-founder of big data company Palantir, an early investor in Facebook, and the helm of a prominent venture capital firm. He is known for his unique libertarianism and contrarian thinking, having invested in several world-changing companies, with extraordinary insights on "disruptive innovation," and he is also a supporter of cryptocurrency.

3. Joe Lonsdale: Co-founder of Palantir and political activist. After leaving Palantir, he founded another well-known venture capital firm, 8VC, which has invested in numerous emerging tech companies. Lonsdale is also very active in politics and is one of the main supporters of Trump's 2024 campaign.

This special political background undoubtedly adds strategic imagination to the future of Erebor. In a potentially friendlier regulatory environment, Erebor's high-profile entry at this time may be precisely aimed at seizing this "policy dividend window" and trying to gain an advantage under the new regulatory framework.

Build the "Most Regulated" Stablecoin Bank

According to its application for a national banking license, Erebor will be headquartered in Columbus, Ohio, with a secondary office in New York, adopting a digital-first operating model. It clearly states that it will serve emerging technology companies in artificial intelligence, cryptocurrency, defense, and manufacturing, as well as investors and employees in these fields. This vertical segmentation and highly specialized market positioning is the key to Erebor's distinction from traditional financial institutions.

Erebor's core strategy lies in its deep embrace of stablecoins and its vision for compliance. It is reported that Erebor plans to incorporate stablecoins into its balance sheet. Stablecoins, as a type of cryptocurrency pegged to fiat currencies like the US dollar, are increasingly becoming a key tool for accelerating cross-border payments, simplifying settlements, and expanding the accessibility of digital financial services due to their value stability, high transaction efficiency, and low costs.

One of the co-CEOs of Erebor, Jacob Hershmann, previously served as an advisor for a well-known stablecoin company. He will replicate a similar path at Erebor, aiming to create it as "the most regulated stablecoin trading execution and facilitation entity."

Through this strategy, Erebor not only hopes to become the "new financier" of Silicon Valley and the emerging technology sector, but also aims to be the "official bridge" connecting the US dollar and digital dollars. It could change the traditional ways companies conduct cross-border transactions and manage digital assets, allowing stablecoins to truly enter mainstream finance. Previously, the new guidelines on crypto asset disclosure issued by regulatory agencies also indirectly confirmed that regulators are actively preparing for the integration of digital assets into the traditional financial system, which aligns with Erebor's compliance path.

The Impact of Erebor: Who Will Benefit and Who Will Be Under Pressure?

Erebor's entry will undoubtedly create ripples in the fintech sector, and its impact will be multidimensional:

For emerging technology companies, the emergence of Erebor comes at the right time. In innovative fields such as AI and cryptocurrency, many startups have long faced a "cold shoulder" from traditional banks. The customized financial services provided by Erebor precisely address the pain points these companies face in financing, operations, and compliance, allowing them to focus more on technological innovation. This is undoubtedly good news, especially for Web3 companies, as a financial service provider that focuses on blockchain technology.

Erebor could become an important compliance benchmark for the entire cryptocurrency industry. If it can successfully operate its stablecoin business under a strict regulatory framework, it will significantly promote the acceptance of digital assets in the mainstream market. This may attract more traditional institutional funds into the crypto space.

The emergence of Erebor is a warning sign for traditional banking. This new digital bank is vying for the tech-savvy customer base with significant growth potential, thanks to its precise positioning and professional background. In the face of such competitors, traditional banks may need to accelerate their pace of innovation and reassess their attitudes towards emerging technologies. In the future, we are likely to see more traditional banks begin to transform or choose to collaborate with specialized digital financial service providers.

In summary, the competition in the crypto world is increasingly resembling a game for giants—Silicon Valley capital and established institutions from Wall Street are all entering the fray, and now, Erebor has joined the competition as well. Whether this company, named after the "Lonely Mountain," can find its own "Arkenstone" may become one of the most compelling stories of the coming years.