Why R3CEV Member Banks Have Left, Abrupt Change in Vision

In August of 2016, Thomson Reuters, the US$42.5 billion financial and media firm, joined R3CEV as a member corporation, which meant that Reuters along with leading banks and major financial institutions planned to lead the development of blockchain and distributed ledger technology. At the time, Reuters was under the impression that R3 will continue to develop blockchain products.

Last year, Thomson Reuters customer solutions managing director Mark Rodrigues stated:

"Thomson Reuters has been collaborating with customers on blockchain and distributed ledger initiatives and powerful proof-of-concept projects for some time now. The opportunities afforded by this emerging technology are enormously exciting for us and for our customers, and our goal with R3 is to collaborate together with the consortium and our customers in these key industry discussions as we shape the future of financial transactions.”

However, as the R3 consortium began to change its long-term vision and alter its focus on blockchain technology to a more suitable solution for the finance industry, member banks including JP Morgan, Goldman Sachs and Santander left the R3 consortium.

Instead, the three banks along with several other banks invested in Axoni, a US-based blockchain company which is actively looking into the implementation of blockchain technology within the global financial ecosystem. Reuters, a R3 partner, reported that the withdrawal of these banks were a result of an investment dispute stemmed from the R3CEV’s request for a $200 million funding round. Eventually, R3 raised closer to half of that reported amount with $107 million in the second part of its three-part series A.

Axoni, which is now working with former R3 members JP Morgan and Goldman Sachs, is also collaborating with Thomson Reuters in its blockchain projects. Current member banks Barclays and Credit Suisse are also collaborating with Axoni, expressing their keen interests on blockchain over database solutions.

"We also took in market data feeds from Thomson Reuters to facilitate automated, synchronized life cycle calculations like accruals and margin payments related to changes in prices and corporate actions,” said Axoni CEO Greg Schvey

Why R3’s Struggle & Banks Joining Axoni Are Correlated

Blockchain technology was introduced by multi-billion dollar banks and financial institutions in order to provide the general public with an alternative solution to bitcoin. Banks felt threatened by bitcoin and its impact on the value of fiat money. Thus, a digital alternative to cash was necessary and blockchain technology seemed to be a perfect solution, particularly because it underpins bitcoin, the largest digital currency network in the world today.

When R3 began to present a different vision and developmental roadmap to its investors, banks and financial institutions started to search for other startups like Axoni that focused solely on blockchain technology. R3CEV’s latest blog post entitled “When is a blockchain not a blockchain?” spurred more controversy, as bitcoin experts and analysts exposed the R3 for deceiving its investors.

In mid-February, R3CEV told the blockchain and bitcoin communities that it never intended to focus on the developme5nt of blockchain. However, the company has been marketing itself as a blockchain consortium since its launch, as seen in the company description on various channels and social media platforms.

This led to bitcoin experts including Andreas Antonopoulos commenting on the matter. Antonopoulos wrote, “Nothing screams incompetence louder than frivolous legal threats against journalists. Looks like R3 feelings are hurt.”

The recent R3-blockchain controversy as well as the company’s inability to introduce commercially successful technologies despite having to raise hundreds of millions of dollars in funding ultimately began to steer companies away from the R3 consortium to companies like Axoni.

Disclaimer: The views expressed in the article are solely that of the author and do not represent those of, nor should they be attributed to CCN.

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About the author

Joseph Young
Joseph Young

Hong Kong-Based Finance and Cryptocurrency Analyst. Contributing regularly to CCN and Hacked. Providing unique insights into the crypto and fintech space since 2012.

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