US OCC Green Lights Erebor Bank for New Charter

The US Office of the Comptroller of the Currency (OCC) on Wednesday announced that it has conditionally approved the de novo national bank charter application for Erebor Bank, National Association, Columbus, Ohio.

The OCC granted preliminary conditional approval to Erebor Bank after thorough review of its application. In granting this charter, the OCC has applied the same rigorous review and standards applied to all charter applications.

Supported by prominent technology investors including Peter Thiel, Joe Lonsdale, and Palmer Luckey, Erebor Bank plans to serve technology companies and high-net-worth individuals engaged in virtual currencies and tokenized products. The founders aim to bridge conventional banking with emerging digital markets while complying with federal standards.

Comptroller of the Currency Jonathan V. Gould said that Erebor is the first de novo bank to receive a preliminary conditional approval since he arrived at the OCC.

Reiterating his commitment to a dynamic and diverse federal banking system, the OCC’s decision is a first but important step in living up to that commitment. The decision is also proof that the OCC under his leadership does not impose blanket barriers to banks that want to engage in digital asset activities, Gould said.

“Permissible digital asset activities, like any other legally permissible banking activity, have a place in the federal banking system if conducted in a safe and sound manner. The OCC will continue to provide a path for innovative approaches to financial services to ensure a strong, diverse financial system that remains relevant over time,” he added.

Decision Draws Flak

However, the OCC’s decision did not go well with the US Senator Elizabeth Warren (D-Mass.), who is the Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs.

In a statement, Warren said that the US President Trump’s billionaire buddies Peter Thiel and Palmer Luckey just received approval from the OCC to launch a new bank that will cater to the financial whims of Silicon Valley billionaires.

She added that such regulatory decisions could favour politically connected entrepreneurs over ordinary businesses.

US Federal Banking System

The federal banking system includes more than 1,000 national banks, federal savings associations, and federal branches of foreign banking organizations operating in the US that range in size from 1,000 smaller community banks under $30 billion in assets focused on meeting local needs to the largest internationally active banks.

These banking companies conduct a wide array of businesses that range from retail and wholesale banking activity to trust, credit card and other more narrowly focused services. The institutions that make up the federal banking system conduct approximately 67% of the banking activity in the US, hold more than $16 trillion in assets combined and manage more than $85 trillion under their custody and fiduciary control.