Palmer Luckey's 'political network' will help his new crypto bank clear regulatory hurdles, fundraising memo says

Palmer Luckey, the founder of Anduril, is steering his innovative digital bank, Erebor, towards a swift regulatory approval process, as outlined in a recent fundraising memo aimed at potential investors. The bank anticipates receiving the necessary charter from the Office of the Comptroller of the Currency (OCC) by late 2025, a timeline it attributes to Luckey's extensive political connections and its close relationship with banking regulators. According to the memo, Erebor expects to secure its charter within six months of submitting its application, which was filed in June. Luckey's political influence is seen as a crucial asset in navigating the regulatory landscape, with the memo asserting, "Palmer's political network will get this done." Records reveal that Luckey donated over $1 million to various political figures and committees last year, predominantly those aligned with the Republican Party. The memo also highlighted the unique access that one of Erebor's co-founders, Jonathan Gould, has to banking regulators. Gould, who took office as Comptroller of the Currency in July, previously held a senior position at the OCC during Donald Trump's presidency. His experience includes a stint as the chief legal officer for bitcoin mining company Bitfury, followed by two years as a partner at the law firm Jones Day. Adam Cohen, a top lawyer from Skadden who assisted Erebor with its OCC application, has recently joined Gould’s team as chief counsel at the OCC. In a LinkedIn post regarding his new role, Cohen expressed gratitude to Gould for the chance to support a banking system that encourages innovation and equitable access to financial services. When approached for comments, the OCC referred to its standard timelines without addressing specific inquiries about Erebor or its connections to Gould. An OCC representative stated that the agency aims to make preliminary decisions on charter applications within 120 days and evaluates each application based on its unique circumstances. Despite the optimistic outlook from Erebor, experts are cautioning that the timeline presented in the memo may be overly ambitious. Todd Baker, a senior fellow at Columbia University, suggested that nine months would be a more realistic estimate, while Michele Alt, a consultant, indicated that establishing a bank after receiving preliminary approval typically takes longer than three months. Erebor submitted its application for deposit insurance to the Federal Deposit Insurance Corp. (FDIC) on July 28, and the bank plans to proceed with that step following preliminary approval. As of August 7, no approvals have been recorded in the OCC's public database regarding Erebor. Historically, the median time for deposit insurance applications in 2024 was approximately 295 days. Experts also noted that the full completion of both the OCC and FDIC processes often extends beyond a year. Baker expressed confidence in Erebor's chances for approval due to the Trump administration's tighter control over regulatory agencies, suggesting that a well-structured business plan could lead to a typical nine-month wait for approval. However, he acknowledged that previous issues could complicate the process. Paige Pidano Paridon, a former Federal Reserve staff member, warned that regulators usually have numerous follow-up questions after an application is submitted. The landscape for commercial banks in the United States has been shrinking for decades, with fintech companies facing particularly tough challenges. While the OCC has granted rapid approvals in some cases, other fintech applications have faced lengthy delays, with Varo Bank taking three years to receive its full approval after substantial investment. As the regulatory environment continues to evolve, all eyes will be on Erebor's journey through the approval process.