R3 looking to raise $200 million

Financial innovation firm R3 CEV aims to raise $200 million from its major bank backers as it prepares to spin out a portion of its operation, reported Financial News, which spoke to individuals familiar with the initiative.

The news agency said R3 is asking its members for funds in return for equity stakes in a new utility that will operate blockchain-powered applications for financial institutions. A source said talks are still in an early phase, and R3 is proposing to hold a stake in the company and run it for a decade.

Financial News reported R3’s development lab will not be part of the spinoff, therefore any commercial product developed by R3 would not, by default, be owned by the spinoff and its backers.

With prominent financial institutions such as BNY Mellon, UBS, Goldman Sachs, JP Morgan and Deutsche Bank among its members, the New York-based R3 launched last September to develop and test distributed ledger technology.

In March, R3 said it had finalized a trial in which 40 member banks tested five different blockchains to issue, trade and redeem a fixed-income product.

Before that, the company announced in January it had successfully completed a ground-breaking distributed ledger experiment with 11 of the largest financial bodies in the world.

In early April, R3 unveiled its Corda distributed ledger platform for financial services. The platform leverages the benefits of blockchain systems, but excludes functions that make blockchains not appropriate for many banking scenarios.

Richard G. Brown, CTO of R3, stressed in a corporate blog post about Corda that the company is not developing a blockchain. Unlike other designs in the distributed ledger sphered, R3’s starting point is individual agreements between companies. It doesn’t believe in the notion that data should be copied to all participants, even if the information is encrypted.

Image via an earlier press release