Back to Blog

Fintech Favorites: Blockchain, the Banks, and the Underbanked



Bye-bye blockchain consortium?

What are blockchain watchers to make of the recent decision by three big banks to withdraw from blockchain consortium, R3?

Goldman Sachs was the first to break ranks. One of the founding members of R3 in 2014, Goldman let its membership lapse as of the end of October, according to the Wall Street Journal. The withdrawal from R3 was not a reflection of Goldman’s interest in the technology; WSJ reports that the bank continues to focus on blockchain technology internally, pursue patents in the field, and last year was part of the team that invested $50 million in bitcoin startup, Circle Internet Financial.


Santander was second, announcing its decision “within hours” of Goldman Sachs. The Spanish bank has said little about its decision (Santander provided CoinDesk with a nine-word response that confirmed their withdrawal and nothing more). And this past week, Morgan Stanley announced it was leaving R3.

So why are these banks headed for the R3 exits? One argument is that R3 is passing the hat, looking for equity investment in order to take the consortium to the next level. In fact, R3 is said to have lowered its funding target from $200 million to $150 million, and give bank members an equity stake of 60%. In a statement issued the same day as Santander’s announcement, R3 noted that consortium members “all have different capacities and capabilities which naturally change over time.” If the $150 million fundraising target is not reached, the round will be opened up to “the strategic investors.”

Blockchain and the underbanked

  • The role of the blockchain in supporting underserved communities is more than social justice hype. This week, more than 100 migrant workers from Myanmar concluded a test of a blockchain remittance solution developed by Everex. The mobile payments app is based on the Ethereum blockchain, and more than 850,000 Thai baht (approximately $24,000) was transferred.
  • A new paper by the Charities Aid Foundation cites blockchain technology as a way to help charities better manage donations, handle complex accounting challenges, as well as conduct research. The report, “Giving Unchained—Philanthropy and the Blockchain,” discusses a variety of ways the blockchain technology could be put to use, including enabling the donation of intangible assets such as intellectual property, “radical transparency,” and smart, “self-governing contracts.”

RJ Krawiec and Jason Killmeyer took to TechCrunch recently to look at ways that blockchain technology can be used to improve government services. “Blockchain is already driving a tremendous amount of investment and innovation across a wide range of industries, starting with financial services,” the pair wrote. “The government could be next.”

For Krawiec and Killmeyer, the just-concluded presidential election season in the U.S. provides one example of how blockchain technology’s “unique and seemingly contradictory combination of attributes” could be put to use. Digital voting and identification, electronic health records, and “audit-free tax audits” were among the use-cases the two suggested could be right around the corner given a sufficiently motivated public sector.

Bitcoin’s mini boom

Blockchain opened its 10 millionth digital wallet this week. Peter Smith, Blockchain co-founder and CEO, credited the election victory of President-elect Trump for the surge in interest in the alt-currency. Quoted in Business Insider, Smith said, “People are basically hedging against economic instability. It’s a worrying time to be holding a lot of British pound, or if you’re America, people flee to safe-haven assets. Bitcoin is one of those.”

Part of the gain in bitcoin prices is also widely believed to be a function of India’s rumored decision to ban the importation of gold. The country is one of the largest gold importers in the world, buying 700 tons a year. But efforts to fight money-laundering and reduce corruption may lead the Indian government to put restrictions on gold imports, as criminals shift toward alternative “safe haven” assets like gold.

A bitcoin pioneer’s blockchain-based comeback

Bitcoin pioneer Charlie Shrem has launched Intellisys Capital, a startup that will offer a private equity investment portfolio called Mainstream Investment that will issue tokens representing “blockchain-based shares” in a variety of companies in manufacturing, real estate, and other industries.

“The strategy is designed to create symbiosis between blockchain assets and traditional finance and to help many traditional sectors move toward state-of-the-art improvement,” Shrem’s company said in a statement.

Shrem was arrested and convicted of money laundering and acting as an unlicensed money transmitter in 2014. He was released from a high-security federal prison camp this spring. The case was controversial, with some in the cryptocurrency community insisting Shrem did nothing wrong.

Like the blockchain? You’ll love FinDEVr

If you’re a developer working with blockchain technology, have we got a conference for you! FinDEVr returns to New York, 21/22 March 2017 for two days of presentations all about the technology driving innovation in financial services today. Visit our FinDEVr page for more information.