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FollowingPalmer-Luckey-backed crypto dedicated bank Ebor has exceeded US$7 billion in deposits
According to the Financial Times reported on October 6, Ebor, a crypto-focused national bank supported by Palmer Luckey, has absorbed more than US$7 billion in deposits and attracted more than 500 customers since its opening. This development marks the return of technology and cryptocurrency deposits to professional banking three years after Silvergate's collapse. The core question now is whether Erebor can avoid repeating the same mistake and escape unscathed amid a wave of depositors rushing to withdraw cash.
So far, Erebor has adopted a cautious strategy. It retains large amounts of money as a liquidity reserve rather than aggressively lending.
Balance sheet characterized by high cash reserves
Erebor's second quarter 2026 document reveals the uniqueness of its model. According to Bank Data Insights, the bank holds $4.06 billion in deposits. At the same time, its cash and interbank balances reached US$4.17 billion, while its total loan amount was only US$77.8 million.
The recently reported US$7 billion in deposits suggests that Erebor may be expanding rapidly, but its overall business approach remains unchanged: funds are flowing in much faster than outflows.
This caution is partly due to the requirements of the Office of the Comptroller of the Currency (OCC). The OCC approval requires Erebor to maintain extremely high balance sheet liquidity for the first three years of its establishment, with a tier 1 leverage ratio of no less than 12%. In the second quarter of this year, the ratio showed 38.81%.
The price is impaired profitability. Erebor reported a loss of $16.3 million. The return on assets was-1.03%, and the net interest margin was 0.71%. Erebor Bank holds US$4.17 billion in cash, with total deposits exceeding US$7 billion.
It seems that Erebor's behavior now suggests that it is more like a bank designed to provide funds quickly than a traditional lender.
The factors that crushed Silvergate three years ago
This is in sharp contrast to Silvergate's situation. According to a report from the Federal Reserve System's Inspector General, Silvergate's assets exceed $16 billion before liquidation in 2023. The bank is highly dependent on crypto customers, is growing rapidly but poorly governed, and relies mainly on uninsured, non-interest-bearing deposits.
When confidence collapses, deposits drain quickly. Silvergate lost 68% of its deposits in the fourth quarter of 2022 and subsequently had to sell securities at huge losses to meet withdrawal needs.
Erebor is trying to avoid this trap by maintaining a higher proportion of ready-to-use balance sheet.
The bridge to round-the-clock dollar settlement
Erebor's ambitions go beyond traditional banking. Its regulatory framework allows limited crypto assets to be reserved for online transaction fees. Its broader strategy also includes blockchain-based settlement and round-the-clock payment services.
This puts Erebor in a position somewhere between regulated deposits, stablecoins and 24/7 digital markets. BIS estimates that by May 2026, the market value of stablecoins will reach approximately US$320 billion. It also warned that broader applications could affect bank financing, liquidity and demand for U.S. dollar assets.
Why the situation in Asia is globalizing risks
Opportunities are increasingly international. The OECD found that as of June 2025, blockchain-based crypto transactions in Asia grew by 69% year-on-year, the fastest growth rate of any region.
Erebor builds a much thicker liquidity cushion than Silvergate, but the core risks have not disappeared. Technology and cryptocurrency deposits can flow quickly.
The real test will come when funds flow on a large scale.
