A freshly leaked memo has given the public its first unvarnished look at how Palmer Luckey, the entrepreneur best known for founding Oculus VR and the defense-tech firm Anduril, is approaching his latest venture: a cryptocurrency-focused digital bank called Erebor. The documents, shared with several industry reporters on August 11, reveal that Luckey’s team is leaning heavily on political relationships to accelerate regulatory clearance — a process that typically drags on for months or even years. The disclosures have reignited a debate over whether such connections amount to strategic networking or an unfair bypass of the rules.
Erebor’s ambition goes beyond a standard crypto bank
Erebor is not positioning itself as another retail-focused exchange. According to internal planning notes, the company aims to become a full-service crypto-native bank with an emphasis on custody, large-scale lending against digital assets, and integration with traditional capital markets. The leaked documents describe a vision for a platform that could serve both high-net-worth individuals and institutional clients, offering compliance-ready tools for holding, borrowing against, and transacting in crypto — all under a single charter.
This ambition demands a level of regulatory approval that few crypto companies in the United States have achieved. A national banking license would give Erebor the ability to operate across all 50 states without the patchwork of money-transmitter licenses that hampers most competitors. It would also place the bank under direct oversight from the Office of the Comptroller of the Currency (OCC), putting it in a rarefied category alongside a small number of fintech banks.
Political capital as a regulatory accelerant
The controversial element comes from how Erebor appears to be pursuing that license. The memo outlines “engagement timelines” with specific lawmakers, senior Treasury Department officials, and regulatory appointees who have personal or professional ties to Luckey or his senior staff. It also highlights Erebor’s commitment to hosting private policy roundtables and providing “industry education” sessions for Congressional committees, framed as public-service outreach but clearly positioned to foster goodwill.
Some contacts listed in the memo date back to Luckey’s work in defense technology, where Anduril’s government contracts and close work with military agencies created a deep Rolodex inside Washington. Others stem from his history as a political donor — a fact that critics point to as evidence of influence-peddling. Supporters counter that engaging policymakers early is standard practice for any company seeking to operate in a tightly regulated space, and that Luckey’s approach simply reflects a well-connected founder using the tools at his disposal.
Why speed matters in Erebor’s strategy
Time is a competitive advantage in banking. In crypto banking, it can be decisive. While the market for digital asset custody and crypto-backed lending is expanding, it is also consolidating around a few key players. Delays in obtaining licensure could leave Erebor locked out of the most profitable niches. The memo underscores this urgency, warning that “approval delays of more than 180 days will materially impact institutional onboarding.”
By moving quickly, Erebor hopes to secure relationships with large asset managers, family offices, and corporate treasuries that are seeking a regulated, U.S.-based custodian for their crypto holdings. Many of these potential clients have been reluctant to use offshore services in the wake of high-profile collapses like FTX, making Erebor’s regulatory positioning central to its pitch.
Ethical questions around regulatory shortcuts
The revelation of politically leveraged timelines has sparked a predictable backlash. Advocacy groups focused on financial fairness argue that it reinforces a two-tier system in which companies with the right friends can leapfrog competitors. “It’s not illegal to call someone you know at Treasury,” one policy analyst told reporters, “but it raises serious questions about equal access and market fairness.”
Others note that the strategy could backfire if seen as overreach. Regulators under political pressure to approve a license may in fact scrutinize the application more closely to avoid perceptions of favoritism. The crypto industry has seen similar episodes before, where politically connected projects drew extra attention — and sometimes tougher terms — precisely because of their high-profile sponsors.
The broader climate: Washington warms to digital assets
Luckey’s move comes at a moment when sentiment in Washington toward crypto banking is shifting. The passage of the GENIUS Act earlier this year laid the groundwork for federal oversight of crypto custodians, exchanges, and stablecoin issuers, replacing the state-by-state patchwork that defined the last decade. President Trump’s administration has actively promoted the idea of regulated crypto in retirement accounts and institutional portfolios, creating a tailwind for projects like Erebor.
However, this warming climate does not erase the hurdles. Even under friendlier rules, crypto banking applicants must prove robust anti-money laundering controls, cybersecurity resilience, capital adequacy, and the ability to segregate customer assets from operational funds. These are heavy lifts for a new entrant, no matter how well-connected its founder.
What happens next
Erebor’s application process is reportedly already underway, though the OCC has not confirmed receiving formal documents. The memo suggests that Luckey’s team expects “conditional approval” before year’s end, contingent on satisfying certain technical and compliance benchmarks. If that timeline holds, Erebor could launch core services in early 2026 — well ahead of many competitors still navigating preliminary licensing steps.
Whether that acceleration is the product of smart engagement or a skewed playing field will likely remain a matter of opinion. What is clear is that Erebor’s blend of crypto ambition, banking infrastructure, and political strategy makes it one of the most closely watched projects in the space. If it succeeds, it could set a precedent for how future crypto banks navigate Washington. If it stumbles, it could become a cautionary tale about the risks of intertwining regulatory processes with political capital.
