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by Anna Irrera (Reuters)
Financial and technology companies led by Bank of America Corp, SBI Holdings Inc, HSBC Holdings Plc, Intel Corp and Temasek Holdings have invested $107 million in R3 CEV, a startup which runs a big bank consortium seeking to develop blockchain technology.
Over 40 institutions from more than 15 countries participated in the first two tranches of the New York company's fundraising round, making it one of the largest investments in a blockchain company to date, R3 said in a statement.
The third and final tranche will open later this year.
Other major investors and companies leading the deal include ING Groep NV, Banco Bradesco SA, Itaú Unibanco SA, Natixis SA, Barclays Plc, UBS Group AG and Wells Fargo & Co, R3 said.
R3 launched in September 2015 with the backing of nine of the world's largest investment banks seeking to make their operations more efficient with new technology, and its membership has rapidly grown to about 80 financial institutions.
It aims to raise $150 million from members and strategic investors, and give them a 60 percent stake.
An R3 spokesman declined to disclose the company's valuation.
Blockchain, best known as the system underpinning digital currency bitcoin, is a public online ledger of transactions maintained by a network of computers on the internet. Financial firms hope that the nascent technology can reduce the cost and complexity of burdensome processes such as international payments and securities settlement.
The completion of the first two tranches follows the departure of several large banks from R3 over the past few months, including JPMorgan Chase & Co, Goldman Sachs Group Inc Banco Santander SA and Morgan Stanley
The banks have internal blockchain projects or investments in other similar startups.
State Street Corp has also left the group, the R3 spokesman added.
"This year we will have pilot projects and early production phase products in the market," R3 Chief Executive David Rutter said in an interview. But "we are a couple of years away until we see massively impactful products," he added.
Skeptics have warned that it might take many years for the financial industry to reap significant benefits from blockchain.
"Distributed ledger technology is well suited for some uses case but it will not be the answer for everything," Kaushalya Somasundaram, head of fintech partnerships and strategy at HSBC, said in an interview.
About R3 CEV
R3 CEV is a New York-based financial technology company that specializes in blockchain technology. The company was founded in 2014 by a group of financial institutions, including Barclays, UBS, and Wells Fargo, with the goal of creating a distributed ledger platform for financial services. R3 has since grown to include over 200 member organizations from around the world, including banks, financial regulators, and technology companies.
In 2015, R3 launched Corda, an open-source blockchain platform designed specifically for the needs of the financial industry. Corda uses a unique approach to blockchain architecture that focuses on privacy, scalability, and interoperability, enabling financial institutions to securely share data and execute transactions without the need for a centralized intermediary.
In addition to developing Corda, R3 has also been involved in several high-profile blockchain projects in the financial industry. For example, R3 partnered with over 70 banks to develop a blockchain-based trade finance platform called Marco Polo, and has also worked with the Bank of Canada on a blockchain-based wholesale payment system.
Overall, R3 has played a significant role in advancing the use of blockchain technology in the financial industry, and its work has helped to establish blockchain as a potentially transformative technology for financial services.