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The corporate blockchain is an old, difficult game.
R3, one of the most important startups in the industry, has tried unsuccessfully this summer to muscle on another blockchain consortium, the Utility Settlement Coin (USC) project, managed by Clearmatics, United Kingdom, CoinDesk has learned.
At the beginning of June, R3 proposed to USC bank members that the project be built on the startup's Corda platform, instead of Clearmatics, which built the platform from the start of the project in 2015, according to four family members
To encourage banks to make this change so late in the game, R3 offered to finance the technical development itself and to pay a share of legal fees, the sources said.
However, the idea was rejected unanimously by the 17 members of the consortium now assigned to a vote later that month. This happened near a crucial moment for USC, as the project moved to "Phase IIIb" at the beginning of August.
Charley Cooper, CEO of R3, said that the company can not discuss individual discussions with partner prospects for reasons of confidentiality. But in general, he said: "We believe in open standards for critical parts of the blockchain market infrastructure, such as cash and value on the general ledger, because these standards will benefit the entire industry. [19659007] Part of our role is identifying opportunities for discussion with potential partners. "
The overture of R3 at USC was an attempt to take advantage of the work already done on cash settlement on its Corda platform. To achieve this, R3 asked USC banks to combine efforts and to bring all previously developed legal and regulatory intellectual property (IP) relating to USC into a proposed new project. To this end, R3 would contribute with its IP shared by projects carried out in collaboration with over 50 central banks, regulators and commercial banks: over 20,000 lines of code and dozens of reports on implementation models.
The start seems undeterred by the refusal. At the end of June, he returned with a revised proposal that would keep Clearmatics in the photo as a partner.
At the same time, R3 supported USC members that them and Clearmatics were at risk of giving up an important opportunity to pool resources and create standards in a critical area. of future market infrastructures, according to a familiar source with the position of R3. proposed to proceed through a collaboration with Clearmatics to demonstrate that the two vendors' technologies were interoperable.
Bad timing
The USC project started in 2015 as an initiative of the Swiss banking giant UBS and Clearmatics. It has the audacious goal of applying distributed ledger technology (DLP) to the way central banks transfer funds and manage liquidity, and then addresses key issues related to credit risk in the financial sector.
Over the past three years, the project has seen a pair of banks join and the last was publicly reported to 11 financial institutions: Barclays, CIBC, Credit Suisse, HSBC, MUFG, State Street, UBS , BNY Mellon, Deutsche Bank, Santander and NEX.
Since then the membership of the consortium is grown up to 17 banks, according to a banker involved in the project, which featured the offer of R3 to bring USC to Rope as an "aggressive" move [19659002] "This is a difficult business environment and R3 is a business like any other and probably did not pass the line of strict business practices," said this source, adding that emphasizes the importance of the USC project.
Provided that the USC project gets the full consent of central banks and regulators, it could become comparable with SWIFT 50 years ago or CLS was 20 years ago, said the banker.
As such, it is understandable that other technology providers might want to present to project members, add the source and, in the future, it would not be surprising to see suppliers selections conducted in a common way in the financial sector.
However, since the USC project is in such a crucial phase, this has ensured a unanimous vote by members declining the approach of R3.
"I think the reason for the unanimity was less on technology and more on the chronology of the process," the source said, concluding:
"The vote came as a week or two before the closing of legal documents for Phase IIIb and I think the attitude was almost, "We do not allow this R3 approach to derail going into that phase or delay the project."
R3 founder and CEO David Rutter image through the CoinDesk archives
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