New Bank Charter Signals Shift in Crypto and Fintech Oversight Under Trump Administration

Erebor, a de novo bank targeting crypto firms and AI startups, opened for business on February 8th as the first new bank charter approved during President Trump's second term, marking a potential thaw in regulatory attitudes toward digital asset banking after years of heightened scrutiny.

The bank's launch comes as the fintech infrastructure landscape faces fresh turbulence. Just days before Erebor's opening, UnCash—a so-called "no KYC" crypto card service—abruptly shut down after Mastercard terminated its card issuing relationships. The service blamed what it called a "clean, corporate guillotine" by the card network, noting that 90% of its cards ran on Mastercard's rails. "This isn't a minor inconvenience—it's a death sentence," UnCash said in a statement announcing refunds for users.

The contrast between these two events illustrates the diverging paths available to crypto-adjacent financial services. While UnCash operated in regulatory gray areas that ultimately proved unsustainable, Erebor pursued the traditional—and arduous—path of obtaining a full bank charter from the Office of the Comptroller of the Currency, having first submitted its application in June 2025.

Erebor's business model explicitly targets the sectors that struggled to maintain banking relationships after Silicon Valley Bank's 2023 failure. The bank intends to serve high-net-worth individuals, businesses and startups in AI, manufacturing, defense, and crypto, along with payment service providers, investment funds, and trading firms. The Lord of the Rings reference in its name signals ambitions to become a fortress for industries that have found themselves banking outcasts.

The bank's connections to the current administration are notable. Among those linked to Erebor is Palmer Luckey, founder of defense contractor Anduril, according to the source material, though the full extent of these relationships and their influence on the charter approval process remains unclear.

For CFOs at fintech companies and crypto firms, Erebor's approval represents a potential shift in the regulatory environment. The OCC's willingness to grant a new charter to a bank explicitly serving digital asset companies stands in stark contrast to the "Operation Chokepoint 2.0" concerns that dominated industry conversations in recent years, when banks systematically de-risked crypto clients.

The timing also matters. UnCash's collapse, coming just one day after being highlighted in a compliance analysis, demonstrates that regulatory arbitrage strategies remain risky. The service's dramatic shutdown—complete with references to fighting "Goliath with a slingshot made of good intentions"—serves as a reminder that operating outside traditional banking frameworks offers no sustainable protection when payment networks decide to enforce their rules.

The question for finance leaders is whether Erebor represents an isolated approval or the beginning of a broader regulatory recalibration. The bank's focus on payment service providers and trading firms suggests it aims to become infrastructure for the infrastructure—a bank for the fintechs that themselves serve end customers.

What remains to be seen is whether Erebor's charter approval signals a genuine policy shift or simply reflects the specific circumstances of a well-connected applicant. For an industry that has spent years navigating banking access challenges, the answer will determine whether this is a turning point or an outlier.