Fintech blockchain development group R3CEV LLC (R3) has taken a blow as a number of leading banks have decided to leave the consortium, limiting the startup’s ability to raise funding.

At the top of the list was merchant banking giant Goldman Sachs Group Inc., which left the group in October by choosing not to renew its $100,000 annual membership. The decision was made after a failure to agree on the terms of a prospective fundraising deal, according to Forbes.

Goldman Sachs was not alone, however. A separate report claimed that Spanish bank Banco Santander SA, merchant services firm Morgan Stanley and Australian financial services provider National Australia Bank Ltd. have also decided to not renew their membership of the 70-odd-member consortium.

As a result of the withdrawal of prominent members, R3 is said to have reduced the amount it aims to raise from members in its next round to $150 million from an originally planned $200 million. Under the revised round, member banks will be offered 60 percent of R3 versus 90 percent as first planned.

“As with any project of this scale and scope, we always expected the make-up of the consortium to change over time,” a spokesman for R3 said in a 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.”

Confidence issues

While spinning it as simply a small change, losing two founding members is definitely not a positive for R3, and could indicate deeper problems with the consortium.

“I’d say it sounds more like a vote of ‘no confidence’ in R3 than in the blockchain itself,” Linchpin Partnerships Founder Chris O’Brien told Bank Innovation. “The interesting question will be: do other prominent banks follow?”

Despite leaving the group, Goldman Sachs is not abandoning its interest in the blockchain. It is pursuing its own research, in addition to investments in blockchain companies including Circle Inc. and Digital Asset Holdings LLC. The National Australia Bank is also undertaking its own blockchain development in conjunction with Ripple Labs Inc.

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