According to reports, a group of billionaires including Peter Thiel is planning to launch a new financial services company to fill the gap left by the collapse of Silicon Valley Bank in March 2023.
According to the Financial Times, citing anonymous sources familiar with the plan, the new bank named Erebor will focus on providing services to startups and cryptocurrency companies. The project has applied for a U.S. banking license, which allows financial institutions to operate as banks.
Thiel's venture capital fund, Founders Fund, is one of the early investors in the bank. Besides Thiel, the group reportedly includes Anduril co-founder Palmer Luckey and 8VC founder Joe Lonsdale.
Thiel co-founded PayPal in the late 1990s and is well-known in the crypto space for advocating Bitcoin (BTC) and digital assets. As Cointelegraph reported, Thiel supports the cryptocurrency exchange Bullish, which recently submitted regulatory filings for an initial public offering in the U.S.
In addition to serving crypto companies, Erebor is reportedly aimed at becoming a major lender for early-stage startups and other "high-risk" companies that may struggle to obtain capital under stricter banking regulations.
California financial regulators closed Silicon Valley Bank in March 2023 after rising interest rates eroded the value of its long-term bond investments, triggering a bank run and liquidity crisis when too many customers attempted to withdraw funds simultaneously. As Cointelegraph reported at the time, Silicon Valley Bank was the first federally insured bank (FDIC) to fail that year.
Its collapse left a significant void in the market, as the bank had served about half of the venture capital-backed tech and life sciences companies in the U.S.
This failure triggered a domino effect, leading to a broader banking crisis that also impacted Silvergate Bank, Signature Bank, and First Republic Bank.
The fallout dealt a heavy blow to the digital asset market, with crypto investment funds losing 10% of their managed assets in just one week.
As noted by the Harvard Business Review, the collapse of Silicon Valley Bank particularly put immense pressure on lending within the venture capital ecosystem.
Despite its failure, Silicon Valley Bank continues to operate today as a division of First Citizens Bank, which acquired the company in late March 2023. Its focus remains on private equity, technology, and life sciences sectors.
Related: Binance CEO: Cryptocurrency aligns with Bhutan's philosophy of happiness
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