R3 Cuts Funding Target by $50m as More Banks Bail Out of the Consortium

After it was revealed yesterday that R3 has lost one of its founding members, Goldman Sachs, new troubles have now surfaced at the blockchain consortium. R3 is reportedly losing the participation of more member institutions, leading the firm to curb its funding goals.

Spanish banking giant Banco Santander has decided to withdraw from the collaboration to design and apply distributed and shared ledger-inspired technologies for the global financial markets. Morgan Stanley and National Australia Bank (NAB) are also no longer actively taking part in the project, according to a report by Reuters.

The news agency is also quoting a “person familiar with the plans” that reveals that R3 is readjusting to the situation by lowering the goal for its first large round of equity funding by 25% down from $200 million to $150 million. The apparent reason for some of the members getting cold feet is that after it was initially understood that R3 will create a new company to provide shared services in which they will get a 90% stake, banks are now offered only a 60% equity stake in return for their investments.

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While a majority of the banks have reportedly signed on to the new offer, not all of them are now expected to stay as members or pitch in for the first funding round. The investments from the banks are expected in stages over the next year, and if the $150 million goal is not reached, R3 will open up the process to its other strategic investors, such as a major technology company.