Trouble continues to brew for members of the R3 blockchain consortium. After the sudden departure of Goldman Sachs and Santander, it now appears Morgan Stanley will be the next bank to pull out. Something strange is going on behind the scenes, as none of these banks is willing to commit more money to the project. For now, it is anybody’s guess as to what the cause of these departures truly is.
The R3 Blockchain Consortium is Crumbling
For some reason, things are falling apart for the R3 consortium all of a sudden. Even though this initiative has been around for some time now – and has money to spare, so to speak – things are not going the way they should. Granted, the engineers developed Corda, a proprietary blockchain solution that will be open sourced in a few weeks. But there is a lot of disagreement between existing partners, and more exits are looming on the horizon.
Morgan Stanley could be the next bank to pull out of this blockchain think tank. In fact, it appears their departure may happen sooner rather than later at this stage. The reason is a mystery, although it seems to correlate with the departure of Goldman Sachs and Santander earlier this week. Neither of these three parties seems willing to invest in the next US$150m round of equity funding.
What is rather interesting to note is how both Goldman Sachs and Santander are also investors in the Hyperledger platform, through Digital Asset Holdings LLC. It appears both institutions favor that blockchain-based solution over Corda, although that has not been confirmed by company officials at this stage.
R3 Aims to raise the earlier mentioned US$150m from a few dozen of its participating banks over the next 9-12 months. Said funds will be used to speed up development of the Cord a platform, as well as any other blockchain-related projects the teams are working on. Earlier projections predicted a US$200m funding round, but it appears less capital is needed all of a sudden.
This new round of funding will grant investing parties equity take. For those who want to remain on board but not invest, they are offered an option to renew their existing membership. Others will simply walk away, which is what Morgan Stanley seems inclined to do. All of the investors would take a 60% ownership in R3, whereas eight founding execs would retain control over the remaining 40%. It appears this corporate structure is causing a fair bit of friction among the R3 members.
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