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30 top banks and Mike Hearn have now joined R3 Global Consortium

While R3 CEV continues to rack up the number of banks joining their consortium, several core team members have been announced, including seasoned Bitcoin core developer Mike Hearn.

The New York-based financial innovation startup, R3 CEV, continues to add to its impressive list of partner banks. The company announced today that five more banks have joined its global consortium, bringing the total to 30. The firm also revealed the team that would design the system.

Led by Wall Street veteran, David Rutter, R3 is self-described as “a financial markets crypto, exchanges and venture practice.” The company is working on a framework for using blockchain technology in financial markets.

David Rutter“The combined strength of our technology team and the diverse global footprint of our member banks – now including five more members – clearly differentiates us and puts us in a unique and exciting position within the distributed ledger space. The R3 collaborative model is the best way to quickly, efficiently and cost effectively deliver these new technologies to global financial markets. We look forward to welcoming more players to our growing team as the initiative continues to develop and evolve.”
— – David Rutter, R3 CEO

In September, the company launched the initiative with nine banks, attracting the attention of the financial industry. However, nine banks were just a start and the company soon added 13 more, in the same month.

The latest round of five banks to join R3 are BNP Paribas, Canadian Imperial Bank of Commerce, ING Bank, Macquarie Bank, and Wells Fargo & Co. This follows last month’s additions of Japan’s Mizuho Bank, Italy’s UniCredit and Stockholm-based Nordea.

30 Top Banks R3CEV30 banks that have joined R3 CEV

According to the latest list of the top banks in the world from Acuity’s Bankers Almanac, BNP Paribas is the world’s fourth largest bank by asset. An independent list of the world’s biggest bank by Forbes‘ lists Wells Fargo as the second largest bank by market capitalization (US$278.3 billion). However, top banks lists often vary based on the date of data gathering and exchange rates.

"We have been inundated with interest in this project from banks across the world since launching with an initial nine institutions just over a month ago."
— – Rutter

The company also announced that it has put together a team spanning across R3’s New York, San Francisco and London offices, to manage the design and delivery of advanced distributed ledger technologies for global financial markets.

Joining the team as Director and Lead Platform Engineer is one of the world’s leading experts in bitcoin and blockchain-based digital currencies, Mike Hearn, fresh from working in residence at Andreessen Horowitz.

Before becoming one of the first bitcoin developers, Hearn was a senior software engineer at Google, where he worked on products such as Google Earth, Maps, Gmail, and account security. Among his many accomplishments, he developed the leading Java-based Bitcoin API, co-developed the first and still most popular Bitcoin wallet for Android, and even pioneered the use of smart contracts with the development of the forward-thinking Lighthouse P2P crowdfunding app.

Recently Hearn has found himself in the block size debate spotlight as a major contributor, along with Gavin Andresen, to the controversial bitcoin XT solution, that forks the bitcoin blockchain to support larger block sizes.

While several developers have found comfortable jobs within the bitcoin community at companies like, Bitpay, Coinkite, and Blockstream, Hearn is the first well-known bitcoin developer to start working directly with banks, who are often perceived as ‘the enemy’ by bitcoin’s stronger adherents.

Several threads have popped up on Reddit and other internet forums warning about this apparent conflict of interests, prompting Hearn himself to responded to many of the questions and accusations today. According to Hearn, there is no conflict: “What R3 is doing just doesn’t overlap with Bitcoin at all, except in the sense that banks are getting together and talking due to the general interest in the block chain algorithm.”

Mike Hearn“It’d be a conflict of interest if there was any chance of banks adopting Bitcoin for the use cases they’re looking at, things like moving fiat currencies around, managing post trade lifecycles, etc. But there is no such chance. The use cases they are looking at and requirements they have cannot be met with the Bitcoin protocol, it just doesn’t have the things they need. They are actually spending a lot more time looking at Ethereum than Bitcoin, as it’s more obvious how to apply it to their use cases.”
— – Hearn

Although he makes a strong argument for the lack of a motive on the part of the banks for hiring him, Hearn also detailed a couple of good reasons why it is just good strategy for R3 CEV to take their current stance of not utilizing the bitcoin blockchain for their interbank network.

“Their Liquid product is actually a subscription based service that has existing Bitcoin exchanges signed up to it. Moving bitcoins around is exactly what the existing Bitcoin system is for. Thus they are in a position where if the blockchain gets worse they make more money, and yet they also have enormous influence over Bitcoin Core," Hearn said. "In contrast, if Bitcoin or the block chain gets better or worse, it makes no difference to what R3 is doing because it’s not using the Bitcoin network at all and unless Bitcoin changed almost unrecognisably, it never will.”

However, when Hearn is directly accused of ‘making a mistake’ by joining a competing effort to the overall bitcoin effort, Hearn’s response seems to make it clear that he is losing faith in Bitcoin as it is today with the one-megabyte block size cap in place.

“The current Bitcoin system, I mean the system we actually use today with the block chain, isn’t going to change the world at all due to the 1mb limit. … So if I have a choice between helping the existing financial system build something better than what they have today that resembles Bitcoin, or helping the Bitcoin community build something worse than what they have today that resembles banking, then I may as well go where the users are and work with the banks.”
— – Hearn

Joining Hearn on the team is former Executive Architect for Banking Innovation at IBM, Richard Gendal Brown, who will be the Managing Director and Chief Technology Officer. His experiences include advising several fintech startups, and he mentors at London’s Startupbootcamp fintech accelerator.

Joining him as Director and Chief Engineer is James Carlyle, Chief Engineer for Personal and Corporate Banking Architecture at Barclays with 25 years of in-depth IT experience as a software engineer, innovator, and enterprise architect.

The team’s Architecture Consultant is a financial cryptographer with 20 years experience building secure ledger systems for the internet, Ian Grigg, who invented the Ricardian Contract, and co-invented triple entry accounting.

Last but not least, the new Head of Research, Tim Swanson brings his expertise as a business and market research consultant, with a strong understanding of business development in Asian markets. Swanson has also written three books focusing on Bitcoin.

This team brings together a unique set of expertise in electronic financial markets, distributed ledgers, and blockchain technologies and will lead joint working groups with the 30 global banks.

R3 CEV“The group will collaborate on research, experimentation, design, and engineering to help advance state-of-the-art enterprise-scale shared ledger solutions to meet banking requirements for security, reliability, performance, scalability, and audit… The group will work within a collaborative lab environment or ‘sandbox’ to test and validate distributed ledger prototypes and protocols.”
— – R3

According to Rutter, the initial focus for the team would be to agree on an underlying architecture. "I think that these technologies will probably be post-trade. I think savings are in the settlement side, in post-trade, in issuance, but not in exchange trading or OTC trading any time in the near future."

The idea of using the blockchain and distributed ledger technology for settlement and post-trade services has been largely explored by a considerable number of financial institutions. Recently, a new competing working group was formed, consisting of the London Stock Exchange, clearing houses and two or R3’s partners, UBS and Societe Generale.


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