Goldman Quits R3 Blockchain Group, Other Banks Said Nextby
Exit comes as R3 said to prepare first equity fundraising
Santander has also left to focus on other blockchain ventures
Goldman Sachs Group Inc. has quit the R3 CEV LLC blockchain group, and other banks may soon follow it out the door, said people familiar with the venture, a sign the financial industry’s leading blockchain consortium may be splintering.
Goldman Sachs’s departure is tied to the structure of the consortium and its ability to work together, and not to the potential of the blockchain technology, said two of the people, who spoke on condition of anonymity because it’s a private matter. R3 is preparing its first round of equity fundraising, and the investment bank decided acquiring a sizeable stake with a seat on the group’s board would be too expensive, said two of the people.
The exit marks a blow to New York-based R3, a group of more than 70 financial institutions, including JPMorgan Chase & Co., Bank of America Corp., and Barclays Plc. The group has set out to build a system for settling and recording securities transactions, as well as making payments, on blockchain-based technology.
Charley Cooper, a managing director at R3, confirmed Goldman Sachs’s departure when reached by phone.
“As with any project of this scale and scope, we always expected the make-up of the consortium to change over time,” Nick Murray-Leslie, an outside spokesman for R3, said in an e-mailed statement. “Developing technology like this requires dedication and significant resources, and our diverse pool of members all have different capacities and capabilities which naturally change over time.”
Banco Santander SA is also leaving R3, according to a bank spokesman. The Madrid-based lender has decided to concentrate its development efforts on other ventures involving the technology that supports digital currencies. Santander InnoVentures, the bank’s $200 million venture fund, is a minority stakeholder in Digital Asset Holdings, the blockchain technology startup led by former JPMorgan Chase & Co. investment banker Blythe Masters. Santander InnoVentures is also an investor in Ripple Labs, a San Francisco firm that is using distributed-ledger technology for banks.
For the last two years, R3 has worked closely with global banks to develop what could be an industry standard using the distributed ledger model that supports bitcoin. The goal is to reduce the time and expense needed in processing financial transactions, and make them more transparent for clients and regulators.
Even so, banks such as Goldman have been developing their own blockchain-based projects in-house, obtaining payments for their own digital currencies, and investing in numerous startups specializing in the technology.
The Wall Street Journal reported Goldman Sachs’s departure earlier Monday.