Erebor: Building the Bank of the Future for Stablecoins and Crypto

A new federally chartered US bank is emerging to solve one of crypto's most persistent problems: the painful gap between on-chain and off-chain financial infrastructure. Erebor, founded by Palmer Luckey (the founder of Anduril and formerly Oculus), is positioning itself as the missing link between traditional banking and the crypto economy.

Summary

At Breakpoint 2025, Suzanne Dannheim, who leads partnerships at Erebor, unveiled the company's ambitious vision for transforming how businesses interact with both fiat and stablecoin ecosystems. With a preconditionally approved federal charter, Erebor aims to be the first bank built from the ground up specifically to handle stablecoin deposits alongside traditional fiat, while supporting payments across all major chains and stablecoins.

Dannheim, who spent six years building Goldman Sachs' institutional crypto business, brings firsthand experience of the frustrations companies face when trying to bridge the traditional financial world with on-chain operations. Her presentation identified four distinct groups suffering from inadequate banking infrastructure: high-growth startups, traditional institutional investors, crypto-native market participants, and blockchain protocols themselves.

The core proposition is compelling: instant, free conversions between stablecoins and fiat, combined with support for institutional customers and their downstream clients through FBO omnibus accounts. Rather than treating crypto banking as an afterthought, Erebor has built its banking core from scratch to natively support the needs of companies operating in both worlds.

Key Points

The Banking Infrastructure Gap

Despite the crypto industry's sustained pushback against traditional banking, Dannheim made a crucial observation: banks remain critical infrastructure for most of the world. The frustration stems not from banks being irrelevant, but from the paradox that such essential services are delivered with poor technology and service. For crypto-native companies, this means enduring excruciating onboarding processes, limited services, and banking partners who simply don't understand their business needs.

The solution, according to Dannheim, isn't to abandon banking entirely but to reimagine what a bank should be for evolved users with access to on-chain rails. In a world where financial products are increasingly democratized and everything is financialized, the purpose of a bank needs to evolve beyond simple custody and payments to become an invisible partner enabling business operations rather than hindering them.

Four Groups Suffering from Poor Banking Infrastructure

The first group identified are high-growth companies raising larger rounds earlier in their lifecycle. These businesses have longer runways, more diverse treasury needs, and demand access to sophisticated financial products. Yet traditional banks either refuse to open accounts or, when they do, limit services to basic deposits while subjecting these companies to painful onboarding processes.

Institutional financial markets participants—hedge funds, asset managers, pension funds—represent the second group. They face multiple forms of FOMO: missing the bull run due to infrastructure limitations, inability to properly assess counterparty risk, and lacking patience for the complex on-chain to off-chain journey required for even simple trades. Dannheim cited striking FINRA data showing 55% of Gen Z owns crypto compared to just 40% owning stocks, highlighting the generational shift that traditional asset managers cannot afford to ignore.

The third group encompasses crypto-native market participants including exchanges and market makers. Despite being deeply integrated into crypto, these businesses lack comprehensive financial infrastructure to maximize operational efficiency. Simple tasks that would take one phone call in traditional finance require six or more hops across different platforms, chains, and stablecoins.

Finally, protocols and tokenized product issuers face constraints from the "walled garden" separating fiat from on-chain assets. Despite their technologically superior and cost-effective solutions, these businesses are hampered by the complexity of bridging these two worlds without a unified intermediary.

Erebor's Technical Approach

Erebor distinguishes itself through several key features. As a federally chartered US bank, it provides FDIC-insured deposits for both stablecoins and fiat—a combination that doesn't exist in the market today. The bank supports all major chains and all major stablecoins, avoiding the fragmentation that plagues current solutions.

Crucially, Erebor built its banking core from scratch rather than layering crypto capabilities onto legacy systems. This enables instantaneous, free conversions between stables and fiat, addressing one of the most significant friction points for crypto businesses. The platform supports both institutional customers directly and enables those institutions to serve their downstream customers through partner programs and FBO omnibus accounts.

The Vision for Future Banking

Dannheim articulated a clear vision: eliminating the painful separation between on-chain and off-chain worlds. Every company, whether crypto-native or not, should be able to hold stablecoins, facilitate stablecoin payments, and access seamless conversions without the current friction. Banking infrastructure should be an invisible enabler rather than an obstacle to innovation.

This vision acknowledges that on-chain technologies are demonstrably superior and more cost-effective, yet adoption is constrained by the lack of bridges to the traditional financial system. Erebor positions itself as that bridge, built specifically for the needs of companies operating at the intersection of crypto and traditional finance.

Facts + Figures

• Erebor is a preconditionally approved federally chartered US bank founded by Palmer Luckey
• The bank supports all major blockchain chains and all major stablecoins
• Stable to fiat conversions will be instantaneous and free
• Erebor built its banking core from scratch to natively support crypto operations
• The bank supports institutional customers and downstream partner programs via FBO omnibus accounts
• According to FINRA, 55% of Gen Z owns crypto while only 40% own stocks
• Suzanne Dannheim spent six years building Goldman Sachs' institutional crypto business before joining Erebor
• Approximately 50% or more of the Breakpoint audience indicated they had experienced the banking friction points described
• The bank will service global customers with both on-chain and off-chain payment capabilities
• Erebor provides insurance for both stablecoin and fiat deposits

Top quotes

• "The argument that I'm here to make today is that if we want our critical financial infrastructure to meet today's needs, we as a society and as an industry have to rethink what a bank actually means for us as evolved users with access to on-chain rails."

• "Banking solutions we have today are largely poor, but also most of the world still relies on banking as critical infrastructure."

• "55% of Gen Z owns crypto, 40% own stocks. That's just Americans."

• "For a large asset manager whose whole business is to facilitate exposure across a variety of asset classes, this is a serious trend that cannot be missed."

• "Your banking solution should not create pain. It should be the invisible partner that allows you to keep up with the fast moving, integrative, innovative business that you're operating."

• "There is a walled garden of fiat and there's a drip drab that gets to the walled garden of on-chain, and the extent to which these two overlap is so complicated because of the lack of a singular party in between."

• "We are building the bank of the future and we are going to embolden the companies of the future who have earned the right to demand superior global financial infrastructure."

Questions Answered

What makes Erebor different from existing crypto-friendly banks?

Erebor is building its banking infrastructure from scratch rather than retrofitting crypto capabilities onto legacy banking systems. This ground-up approach allows for native support of stablecoins alongside traditional fiat deposits, with instant and free conversions between the two. Unlike existing solutions that treat crypto as an add-on service, Erebor's core technology is designed specifically for the needs of companies operating across both on-chain and traditional financial rails.

Who founded Erebor and what is their background?

Erebor was founded by Palmer Luckey, who previously founded Anduril (a defense technology company) and Oculus (the virtual reality company acquired by Meta). The partnerships at Erebor are led by Suzanne Dannheim, who spent six years at Goldman Sachs building their institutional crypto business, giving her direct experience with the infrastructure challenges facing crypto companies seeking banking services.

What types of businesses will Erebor serve?

Erebor is designed to serve four main categories: high-growth startups with complex treasury needs, traditional institutional investors seeking crypto exposure, crypto-native market participants like exchanges and market makers, and blockchain protocols and tokenized product issuers. The bank supports both direct institutional relationships and enables institutions to serve their own customers through partner programs and FBO omnibus accounts.

Why is there such a gap between crypto and traditional banking today?

The gap exists because traditional banks either refuse to serve crypto companies entirely or, when they do, offer only basic deposit services with painful onboarding processes. Their legacy systems weren't designed for digital asset operations, making even simple tasks like converting between stablecoins and fiat slow and expensive. Additionally, the separation between on-chain and off-chain systems creates operational complexity that requires multiple platforms and multiple steps for transactions that should be simple.

How does the generational shift toward crypto affect traditional finance?

FINRA data shows that 55% of Gen Z owns cryptocurrency compared to just 40% owning stocks, representing a fundamental shift in how younger generations build wealth. This trend forces traditional asset managers to develop crypto capabilities or risk losing relevance with the next generation of investors. Beyond just buying tokens, younger users appreciate on-chain rails and efficiency, preferring to keep their wealth in systems that offer better user experience and operational advantages.

What specific features will Erebor offer to solve current banking pain points?

Erebor will provide FDIC-insured deposits for both stablecoins and fiat, support for all major blockchain networks and stablecoins, instantaneous free conversions between stable and fiat currencies, on-chain and off-chain payment facilitation, and institutional-grade services including FBO omnibus accounts for partner programs. The bank's ground-up build enables these features to work seamlessly rather than being bolted onto legacy systems.