Silicon Valley pros join forces to create a new type of encryption bank, Erebor, targeting the field of technological innovation.

The collapse of Silicon Valley Bank in 2023 has caused a huge shock in the tech finance sector, leaving a service gap that urgently needs to be filled. Now, a new battle to reshape the financial landscape is quietly unfolding.

According to reports, a new "encryption bank" named Erebor is in the works, backed by a group of heavyweight figures from Silicon Valley. The name, derived from the treasure-rich "Lonely Mountain" in "The Hobbit," symbolizes the bank's grand vision: to seek "treasure-like" financial services for emerging technologies in the "desert" of traditional finance.

Erebor not only targets the service gap left by Silicon Valley Bank for technology enterprises, but also positions stablecoins as a core strategy, aiming to become "the most regulated entity for conducting and promoting stablecoin transactions," indicating that the integration of traditional finance and encryption will enter a new phase.

Aftermath of Silicon Valley Bank's Collapse: High-Tech Companies Urgently Need a New "Backer"

Silicon Valley Bank was once the "go-to bank" for American tech startups and the venture capital circle, providing comprehensive services to numerous startups that were considered "high-risk" by many traditional large banks. From deposits and loans to investment banking, it covered almost every stage of tech company growth. It was deeply tied to the Silicon Valley entrepreneurial ecosystem, becoming a key financial partner for many innovative companies from incubation to listing.

However, the excessive focus on technology industry clients, the significant unrealized losses caused by misjudging the Federal Reserve's interest rate hikes, and the speed and scale of bank runs in the social media era ultimately triggered a liquidity crisis in March 2023.

Despite the swift intervention of the U.S. government, which took emergency measures to protect depositors, traditional large banks have generally maintained a cautious attitude towards technology, especially high-risk startups in the encryption and AI sectors, following the collapse of Silicon Valley Bank. This has created a noticeable "vacuum" in financial services, making it urgent to find a "new supporter" that understands and supports their development.

Erebor: The Ambitious Work of Silicon Valley Giants

Erebor was born out of necessity, and its lineup of initiators can be described as luxurious:

Palmer Luckey: The legendary founder of the virtual reality (VR) headset company Oculus VR. He sold Oculus VR to Facebook (now Meta) for a high price of $2 billion, becoming a pioneer in the VR field. He then transitioned to defense technology and co-founded Anduril Industries in 2017, focusing on providing advanced AI-driven unmanned systems, sensors, and surveillance technologies for the United States and its allies. Anduril has quickly risen to prominence in the defense technology sector with its rapid iteration and momentum to disrupt traditional military-industrial giants.

Peter Thiel: A Silicon Valley legend with multiple identities: co-founder of a certain payment platform, spiritual leader of the "certain payment platform gang", co-founder of a certain big data company, early investor in a certain social platform, and founder and leader of a well-known venture capital fund.

Thiel is known for his unique liberalism and contrarian thinking. He has invested in several companies that are changing the world, has an unusual obsession with "disruptive innovation," and is an advocate of encryption.

Joe Lonsdale: Co-founder of a big data company and political activist. Lonsdale is a disciple of Thiel and one of the co-founders of the company. After leaving, he founded another well-known venture capital firm and invested in numerous emerging tech companies. Like Thiel, Lonsdale is also very politically active and is one of the main donors to Trump's 2024 campaign.

This special political background undoubtedly adds strategic imagination to the future of Erebor. During Trump's possible second term, the regulatory environment in the United States may adopt an embracing attitude towards encryption. Erebor's high-profile entry at this time may be precisely due to its recognition of this "policy dividend window," attempting to seize the initiative under the new regulatory framework.

Build the "Most Regulated" Stablecoin Bank

According to its national banking license application, Erebor Bank's headquarters will be located in Columbus, Ohio, with a secondary office established in New York, adopting a digital-first operating model. It clearly states that it will serve emerging technology companies in artificial intelligence, encryption, defense, and manufacturing, as well as investors and employees in these fields. This vertical segmentation and highly specialized market positioning is precisely what distinguishes Erebor from traditional banks.

The core strategy of Erebor also 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. As a type of encryption asset linked to fiat currencies like the US dollar, stablecoins are increasingly becoming a key tool for accelerating cross-border payments, simplifying settlements, and expanding the accessibility of digital financial services due to their stability in value, high transaction efficiency, and low costs.

One of the co-CEOs of Erebor, Jacob Hirschman, has served as an advisor to a well-known stablecoin company. He will replicate a similar path at Erebor, aiming to build it into "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 dollar. It could change the traditional ways that companies conduct cross-border transactions and manage digital assets, allowing stablecoins to truly enter mainstream finance. Previously, the new guidelines for the disclosure of encryption ETPs issued by the SEC's Division of Corporation Finance 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 Influence of the New "Capital Providers" in Silicon Valley: Opportunities and Challenges Coexist

The entry of Erebor Bank is bound to create ripples in the fintech sector, and its impact will be multidimensional:

The emergence of Erebor is timely for emerging tech companies. In innovative fields such as AI and encryption, many startups have long faced "cold treatment" from traditional banks. The customized financial services offered by Erebor precisely address these companies' pain points 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.

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

The emergence of Erebor is a warning signal for the traditional banking industry. This emerging digital bank is vying for the most growth-potential tech customer base with its precise positioning and professional background. In the face of such competitors, traditional banks may need to accelerate their innovation pace 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 professional digital financial service providers.

In short, the competition in the encryption world is increasingly resembling a game for giants—Silicon Valley capital and Wall Street old money are all entering the fray, and now, Erebor has also joined this competition. Whether this company named "Lonely Mountain" can find its own "Arkenstone" may become one of the most noteworthy stories in the coming years.