JPMorgan Chase & Co leaves blockchain consortium R3

People walk by the JP Morgan & Chase Co. building in New York in an October 24, 2013 file photo. REUTERS/Eric Thayer/Files

JPMorgan Chase & Co has left the mammoth bank blockchain consortium led by New York-based startup R3 CEV, the latest member to depart over the course of the company’s fundraising process, R3 confirmed on Thursday.

R3, which counts about 80 financial institutions as members, wants to raise $150 million from its members and strategic investors and give them a 60 percent stake in R3.

“JPMorgan parted ways with R3 to pursue a very distinct technology path which is at odds with the one chosen by the global financial services industry, represented by our 80-plus members,” said Charley Cooper, a managing director at R3.

JPMorgan declined to comment.

JPMorgan’s move follows the departure of other large banks from the R3 consortium.

Goldman Sachs Group Inc, Banco Santander SA, Morgan Stanley and National Australian Bank left the group in quick succession in late 2016, as R3 proceeded with its fundraising plans.

Like the other banks that have left the group, JPMorgan is involved in other blockchain initiatives.

The bank is a member of the newly formed blockchain consortium Enterprise Ethereum Alliance, and is an investor in blockchain startups Axoni and Digital Asset Holdings. It also participates in the Hyperledger Project, a cross-industry group led by the Linux Foundation.

R3, which began operating in September 2015, seeks to help the financial sector develop shared blockchain technology to run some of their most cumbersome and expensive processes.

Blockchain is a distributed ledger of transactions that is maintained by a network of computers on the internet rather than a centralized authority. It first emerged as the system underpinning cryptocurrency bitcoin, but banks are hoping it can help them reduce the complexity and costs of activities like international payments and trading settlement.

Skeptics have warned that the technology is still in its early days and it might take many years before the financial industry can reap any benefits.

Since it began operating, R3 has rapidly gained the support from the world’s largest banks, with members including UBS Group AG, Deutsche Bank AG, Barclays Plc, Bank of America Corp.

So far they have paid membership fees to participate in the company’s activities.

R3 had initially planned to raise $200 million from members and give them a 90 percent stake in a new company. In November, it lowered the target and said members would get a 60 percent stake in R3.

Thomson Reuters Corp is also a member of R3.

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Reuters