CoinDesk reported earlier this week that JP Morgan has officially exited R3.
This is not a surprise – last year when Goldman Sachs and Banco Santander left the banking consortium, rumours abounded that JP Morgan would stay out of the funding deal that R3 was trying to put together. Disagreement with the structure of the financing was one reason cited for the exit of the two large financial firms.
Speaking of the funding deal, you know, the one that David Rutter assured us would be completed in Q1 and would be biggest ever in the sector…
“We will be closing the largest round in the industry, with the largest number of market participants, now, in the first quarter.” (from CoinDesk, January 11, 2017)
Where is it? The first quarter has come and gone, and still no news. And then we hear that JP Morgan are leaving.
R3’s reaction is disconcerting. Managing Director Charley Cooper gave the following comment to CoinDesk:
“JP Morgan parted ways with R3 to pursue a very distinct technology path which is at odds with what the global financial services industry, represented by our 80-plus members, have chosen.” (from CoinDesk, April 27, 2017)
So, the “global financial services industry” (as represented by a mere 80 firms) has chosen a certain technology path? Do the tens of thousands of financial firms not in R3 know this?
And are they really comfortable with choosing only one path this early in the game? They are so sure that R3’s solution is the correct one? Whether they are or not, it’s R3’s assumption that they should throw all in with their solution that makes me splutter.
JP Morgan’s leaving is quite a big deal – it was a founding member.
Back when Goldman Sachs (also a founding member) and Santander left, my hypothesis was that they were backing away from consortia in general. Consortia are especially useful when investigating a marginal activity. When it becomes key, and when businesses feel that they know enough, it makes more sense to “go it alone” for competitive advantage.
JP Morgan, however, is active in both Hyperledger and the Enterprise Ethereum Alliance, and has contributed code to each. It’s not rejecting consortia as a concept. (Also, Santander since then has joined the Enterprise Ethereum Alliance as a founding member.)
So, it does sound like there were issues with R3 in particular. And it sounds like R3’s funding round isn’t going as smoothly as hoped.