SBI Takes $100 Million Stake in Erebor, the US Digital Bank Built to Serve the "Innovation Economy"
Written by Nicky, Foresight News
According to an announcement released by SBI Holdings on November 3, the firm plans to invest $100 million in digital bank Erebor Bank through its US subsidiary SBI Holdings USA. Erebor supports stablecoin deposit and withdrawal services, and SBI stated it will explore broader collaborative opportunities with the bank.
Erebor Bank is a nationally chartered bank headquartered in Columbus, Ohio, holding a national bank charter issued by the Office of the Comptroller of the Currency (OCC) and deposit insurance coverage from the Federal Deposit Insurance Corporation (FDIC).
What Exactly Does Erebor Bank Do?
Public records show that Erebor Bank was co-founded in 2025 by Palmer Luckey, Owen Rapaport, Jacob Hirshman, Aaron Pelz, and Trevor Capozza, taking its name from the Lonely Mountain in *The Hobbit*.
Public records indicate that Palmer Luckey is a prominent American entrepreneur and inventor, best known as the creator of the virtual reality (VR) headset Oculus Rift, original founder of Oculus VR, and founder of defense technology firm Anduril Industries. It is worth noting that he only serves in a strategic advisory role on Erebor Bank's board and is not involved in day-to-day operations.
The remaining co-founders include: Owen Rapaport, who serves as CEO and previously founded crypto compliance firm Aer Compliance; Jacob Hirshman, who acts as board chair and previously worked as an advisor at Circle and at Sullivan & Cromwell; Aaron Pelz as CTO; and Trevor Capozza, another co-founder whose specific role is not disclosed in public records.
Palmer Luckey, Image source: AF Post
Erebor's core founder and key backer Palmer Luckey has long been a major donor to the Republican Party and election campaigns linked to Donald Trump. According to reports from OpenSecrets and *The Guardian*, he has donated a cumulative $5.9 million to Republican candidates and affiliated groups since 2017, hosted multiple Trump-related fundraising events, and made large direct donations to entities including the Trump 47 Committee.
During the 2026 midterm election cycle, Luckey continued making donations to Republican federal candidates and committees. Analysis from outlets including LAist shows he contributed over $350,000 to more than 70 campaigns this cycle, nearly all to Republican-affiliated groups, with cumulative contributions to GOP-related committees exceeding $1 million. In summer 2026, he also hosted the "Keep the Senate" fundraising event tied to the National Republican Senatorial Committee.
According to public reports, Donald Trump referred to Luckey as "my friend" and "a very impressive person" during an event at Anduril's new shipyard in Maryland in October 2026.
Erebor is positioned to serve US "innovation economy" enterprises, with a core customer base spanning defense, robotics, artificial intelligence, hard tech, energy, advanced manufacturing, and the crypto industry. It offers deposit, lending, payment, and treasury management services, alongside supporting stablecoin deposits and withdrawals as well as 24/7 blockchain settlement. Unlike trust institutions that only provide custodial services, Erebor holds a full commercial banking charter, allowing it to take FDIC-insured deposits and issue loans.
According to an October announcement from Robinhood, Erebor obtained its full OCC national charter and FDIC insurance in February 2026, and has since grown its deposit base to over $7 billion. As reported by Bloomberg on July 2, the bank grew its deposit volume from $1.1 billion to $4.05 billion over the prior three months, added nearly 400 new clients, and projected it would reach profitability by the end of the year. Sacra estimates its annualized revenue hit roughly $112 million in July, with a client base of hundreds of capital-intensive companies generating high per-customer lifetime value.
Why Did SBI Choose to Invest in Erebor?
SBI Holdings is a diversified Japanese financial group spun out of SoftBank in 1999, with business lines spanning securities, banking, asset management, venture capital, and digital assets.
The firm has a deep footprint in the crypto space: in 2016, it invested in Ripple and co-founded SBI Ripple Asia, invested in bitFlyer, and launched licensed exchange SBI VC Trade. In June 2026, it launched Japan’s first trust-structured yen stablecoin JPYSC, partnered with Circle to distribute USDC in Japan, and collaborated with Ripple to advance RLUSD adoption. In October 2026, it completed its acquisition of Japanese crypto exchange Bitbank. Beyond these efforts, SBI has also invested in Web3 infrastructure projects including Gauntlet, Morpho, and Elliptic.
For SBI, the core value of Erebor lies in its US market USD on-ramp/off-ramp access and stablecoin settlement capabilities. Erebor supports stablecoin deposit and withdrawal services, operates a self-built core system that enables blockchain settlement on weekends and outside standard banking hours, and accepts crypto assets as loan collateral. SBI noted in its announcement that it will explore broader cooperation, signaling potential alignment between the two firms on USD stablecoin ingress and egress, cross-border settlement, and institutional client service.
SBI is not the only institutional investor bullish on Erebor. According to an announcement released by Robinhood on October 21, Robinhood Ventures Fund I (NYSE: RVI) completed its $30 million purchase of preferred stock in Erebor on September 17.
RVI is the first fund launched by Robinhood Ventures, listed on the New York Stock Exchange on March 6, 2026. As a closed-end fund, it primarily invests in a portfolio of private companies, is open to retail investors with no accredited investor requirements or minimum investment thresholds. RVI President Sarah Pinto stated in the announcement that the banking sector has ample room for innovation, and Erebor has the potential to become the foundational financial infrastructure required to support the US innovation economy.
In December 2025, Erebor closed a $350 million funding round at a $4.35 billion valuation, led by Lux Capital with participation from Founders Fund, 8VC, Haun Ventures, and other firms. As reported by Bloomberg on July 2, Erebor is in talks with investors for a new funding round targeting a valuation of at least $8 billion, nearly double its value at the end of 2025. Its existing investor roster also includes Andreessen Horowitz and other prominent firms.
Erebor’s key differentiation is its integration of stablecoins into core banking operations, rather than limiting itself to crypto custodial services. It supports deposit, withdrawal, and settlement for major stablecoins including USDC and USDT, and integrated the Sui network in April 2026 to power stablecoin deposit/withdrawal services and related offerings. The bank holds a small amount of crypto assets to cover gas fees and wrapped stablecoin operations, but does not itself issue stablecoins, focusing instead on deposit, settlement, and adjacent service lines.
As reported by The Information on September 16, Erebor earlier this year attracted crypto clients by offering free cash redemption for stablecoins issued by Circle and Tether, but the policy was exploited by professional trading firms for arbitrage, causing losses for the bank. Erebor subsequently tightened the terms of this offering.
Erebor’s direct competitors include Column, Lead Bank, Cross River, and similar institutions. Column is a software-native, API-first nationally chartered US bank with clients including Mercury, Brex, and Ramp. Lead Bank has moved quickly in the stablecoin niche, launching USDC on/off-ramp services and cross-border payment solutions. Cross River is an established bank with a long track record of serving fintech and crypto companies, counting Circle, Coinbase, and Gemini among its clients.
Compared to these competitors, Erebor’s strengths lie in its in-house national banking charter, FDIC insurance, high-touch service model, and clear focus on innovative tech and crypto clients, while its weaknesses include its short operating history and relatively early stage of scale-up.
According to Paul Davies, an opinion columnist at Bloomberg, Erebor replicates Silicon Valley Bank's (SVB) model of focusing on a single high-volatility sector, exposing it to concentration risk. Senator Elizabeth Warren has previously raised concerns about Erebor’s rapid charter approval and its political ties. Industry outlets widely frame the bank’s rise as a signal of the revival of crypto-friendly banking, but also warn of early operational challenges — for example, the free cash redemption policy for Circle and Tether stablecoins Erebor launched this year to attract crypto clients was later adjusted after professional trading firms exploited the offer for arbitrage, resulting in losses.