Crypto Banking Race Heats Up: Erebor Gets Green Light, Sony Enters the Fray
The battle for crypto banking dominance is accelerating as the OCC grants its first conditional approval
Welcome to the Friday edition of the Crypto In America newsletter!
What you’ll read: A roundup of the week’s biggest news in crypto banking and other stories.
A notable precedent was set this week in crypto banking as the OCC granted conditional approval for a national bank charter to Erebor, an Ohio-based, crypto-friendly bank backed by tech billionaires Palmer Luckey, Joe Lonsdale, and Peter Thiel.
The move marks the first time a crypto-affiliated bank has received initial regulatory approval to become a full-service depository institution, granting it the same lending and payment settlement capabilities as a traditional bank. Erebor also has a pending deposit insurance application with the FDIC which would protect customer deposits and further legitimize it as a full-service bank.
Anchorage Digital, which received the first-ever OCC trust charter for crypto activities in 2021, is different in that it is not a depository institution under the Federal Reserve Act, and it is not permitted to accept insured deposits. Instead, its charter allows it to custody crypto, and it has also recently applied for a Fed master account which may allow it to access some of the Fed’s payment services, but would not allow it to become a full-service bank.
Erebor, on the other hand, is aiming to fill the void left by now-defunct crypto-friendly banks Signature, Silvergate, and Silicon Valley Bank, which collapsed during the regional banking crisis of 2023. The bank intends to serve companies who have faced difficulties securing banking services like tech companies focused on crypto, AI, defense and manufacturing, as well as payment service providers, investment funds and trading firms.
With the new approval, Erebor, named after the fictional mountain in The Lord of the Rings, will enter a conditional period during which it must meet certain pre-opening requirements.
The race to offer crypto banking services in the U.S. is so hot that even Japanese conglomerate Sony has thrown its hat in the ring.
The firm filed with the OCC this week, entering the race to secure a trust charter through its subsidiary, Connectia Trust, in order to issue stablecoins and provide crypto custody. If approved, Sony would be one of the first major global tech firms to operate a federally regulated crypto bank in the U.S.
In the meantime, crypto firms including Paxos, Ripple, Circle, Coinbase, and Stripe await decisions on their OCC trust charter applications.
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Weekly Recap
ICYMI. Here are the biggest news stories this week from the intersection of Washington and Web3:
Gold surpassed $4,300 for the first time, becoming the first asset to hit a $30 trillion market cap.
Andreessen Horowitz’s crypto arm, a16z, invested $50 million in Solana staking protocol Jito, marking the largest investment the project has received to date
Paxos accidentally minted $300 trillion worth of PayPal’s stablecoin, PYUSD, before realizing the error and burning the tokens. Carrying out a $300 trillion payout would have required more than twice the world’s total GDP.
U.S. Bank, the fifth largest in the U.S., announced the launch of a new digital assets department focused on accelerating stablecoin issuance, custody, and tokenization.
Ripple acquired treasury management software firm GTreasury for $1B to expand its corporate finance offerings.
BlackRock is set to unveil a money market fund aligned with the GENIUS Act, named the BlackRock Select Treasury-Based Liquidity Fund, designed specifically for stablecoin issuers, according to CNBC.
The Trump family has made an estimated $1B from their various crypto ventures, Eric Trump told Financial Times.
Kraken became the latest crypto exchange to acquire a CFTC-regulated DCM, expanding into futures, derivatives trading, and event contracts.
The DOJ seized a record $15 billion worth of Bitcoin from a massive pig butchering scam based in Cambodia, the largest seizure in government history.
Binance launched a $400 million “Together Initiative” to restore confidence in its platform after Friday’s flash crash, offering up to $300 million in USDC payouts to users and a $100 million loan fund for institutions.
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Sony entering the crypto banking space through Connectia Trust is a fascinating strategic move that says a lot about how mainstream crypto infrastructure has become. When a Japanese conglomerate known for consumer electronics and entertainment decides to compete with Paxos and Coinbase for a trust charter, you know the landscape has fundamentaly shifted.
What's particuarly interesting is the timing. Sony is coming in after the 2023 regional banking crisis wiped out Signature, Silvergate, and SVB, which means there's actualy a real need for credible institutions in this space. Traditional banks have been hesitant to serve crypto companies, so there's a legitimate market gap. If Sony can leverage its brand reputation and regulatory patience to build trust with both crypto firms and regulators, they might have a real advantage over pure play crypto companies that are still fighting perception battles.
Nice report, especially the lead item about "Erebor."