R3 Rebuffed In Attempted Bid for Settlement Coin Blockchain Project

R3, one of the most prominent startups in the sector, tried unsuccessfully this summer to muscle in on another blockchain consortium, the Utility Settlement Coin project, which is managed by U.K. technology vendor Clearmatics, CoinDesk has learned.

In early June, R3 proposed to the USC's bank members that the project be built on the startup's Corda platform, instead of Clearmatics, which has been building the platform since the project's inception in 2015, according to four people familiar with the situation.

In order to execute this goal, R3 asked the USC banks to combine efforts and to bring all previously developed legal and regulatory intellectual property related to USC to a new proposed project.

To this, R3 would contribute its sharable IP from projects done 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 USC project began life back in 2015 as an initiative of Swiss banking giant UBS and Clearmatics.

Over the past three years, the project has seen a brace of banks join and it was last publicly reported to comprise 11 financial institutions: Barclays, CIBC, Credit Suisse, HSBC, MUFG, State Street, UBS, BNY Mellon, Deutsche Bank, Santander and NEX. Since then the consortium membership has grown to 17 banks, according to a banker involved in the project, who characterized R3's bid to bring USC on to Corda as an "Aggressive" move.

"This is a tough business environment and R3 is a business like any other and it probably didn't cross the line of sharp business practice," said this source, adding that it highlights the importance of the USC project.

Provided the USC project gets the full go-ahead from central banks and regulators, it could become comparable with SWIFT was 50 years ago or CLS was 20 years ago, said the banker.

Because the USC project is at such a pivotal stage, this ensured a unanimous vote from the members declining R3's approach.

"The vote came like literally a week or two before the closing of the legal documents for Phase IIIb and I think pretty much the attitude was, 'Let's not allow this approach by R3 to derail going into that phase or delay the project.'".