Blockchain Consortium R3 Gets Financial Injection
Forex settlement provider CLS has invested USD 5 million in the banking consortium.
US-based blockchain startup R3 CEV, running a consortium of over 100 financial institutions, has received USD 5 million from foreign exchange (forex) settlement provider CLS, Reuters reported on Wednesday.
The investment is part of R3’s third fundraising tranche, which attracted funds also from Japanese IT services provider TIS and Singapore real estate company OUE. The banking consortium received USD 5 million from each of the two firms, according to an anonymous source familiar with the matter.
David Rutter, R3 founder and CEO, shared his contentedness that major players like CLS are turning to blockchain technology in order to “continue making their products and services faster, easier, safer and more cost-effective for the end user”.
In the previous two tranches, the New York-headquartered financial institution secured a total of USD 107 million from over 40 companies, including Bank of America, SBI Holdings, and Intel.
CLS’ move to invest in R3 gives the forex settlement provider a seat on R3’s board of directors, the two companies told Reuters.
Challenges facing R3
Started in 2015, the R3 consortium counts over 200 banks, regulators, trade associations and technology firms with the purpose of building cryptocurrency technology for the financial sector. Prominent members of the network are Credit Suisse, Royal Bank of Scotland, Deutsche Bank, and ING, among others.
However, several major players in the banking sector have already departed from R3. Goldman Sachs, Banco Santander and Morgan Stanley pulled out of the consortium in November 2016, followed by JPMorgan in April 2017.
It is not crystal clear what reasons lie behind the withdrawals, but media reports named possible factors like unwillingness to participate in an extensive consortium giving only limited operational control and pursuit of a different technology strategy.
Although the blockchain firm has seen several banks leave the network, the R3 membership is growing and so is the interest in bank-backed alliances aimed at exploring blockchain technology. Another similar, large consortium is the trade finance platform Hyperledger Fabric, hosted by the Linux Foundation, which brings over 100 global companies together.
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