Erebor Bank tightens terms on free stablecoin-to-cash conversions

Erebor Bank, the national bank founded by Oculus creator Palmer Luckey that launched with a promise of free, instant stablecoin-to-fiat conversions, has pulled back on that offer for certain customers. The culprit: trading firms that treated the fee-free service less like a banking perk and more like a money printer. The policy change, which took effect around September 15, 2026, specifically targets clients whose conversion patterns looked less like normal banking activity and more like systematic arbitrage. Firms like Wintermute were among those exploiting the no-cost conversions to profit from tiny price discrepancies between stablecoins and their dollar pegs, essentially using Erebor as a free toll road for high-frequency round trips. From launch darling to growing pains Erebor opened its doors on February 8, 2026, after securing a national charter from the Office of the Comptroller of the Currency. Backed by Peter Thiel’s Founders Fund, the bank positioned itself as the bridge between traditional finance and crypto, offering services that most legacy banks still treat like radioactive waste: stablecoin deposits, 24/7 blockchain settlement, lending against digital-asset collate...