Morgan Stanley can follow Goldman and Santander that have recently unveiled their plans to leave R3 consortium.

Morgan Stanley has announced its intention to leave the R3 blockchain consortium. Thus, the bank can become the third member to sever itself from the consortium after Goldman Sachs Group Inc and Banco Santander SA.

The Wall Street Journal reports that Morgan Stanley is not going to renew its membership with R3 and invest in the New York-based blockchain startup’s reported $150 million round of equity funding.

R3 has recently unveiled its plan to give bank members a 60 percent equity stake in exchange for the funding. R3’s funding will be raised in phases over the next nine to 12 months. The company has reduced the amount of equity funding it intends to raise from bank members from $200 million to $150 million. If R3 doesn’t manage to reach the $150 million target, it will attract other strategic investors such as a technology companies.

R3 consortium members that will agree to invest will be offered a stake in R3’s development lab where they will be able to join efforts to explore, research, and develop blockchain solutions. R3 is going to create a new company providing shared services for the owners, who would get a 90 percent stake. R3 would have run this utility for 10 years and retained a stake in it.

Three major banks have already announced decision to leave the R3 consortium, probably the largest and most well-known collaborative effort of the financial services industry to explore blockchain technology. A source close to the matter commented: “Goldman sought more leverage in the deal, which could have included a board seat or some other element of additional control, sources said. When R3’s member financial firms moved to cap the raise at $150 million, Goldman decided to exit the conversation and focus elsewhere”.

Experts state that the departure of three banks can negatively impact other member as it demonstrates that the consortium model has limitations. Sandeep Kumar, managing director of capital markets at Synechron, says:

“As R3 reworks its membership model, Goldman Sachs leaving could create a wave of other companies leaving the consortium and breaking out onto their own to form mini-consortiums with two to three banks and non-bank intermediaries.”

According to the WSJ source, the Bank of America, Barclays and UBS still keep silent about they plans of whether to invest in R3 for that equity stake.

Reportedly, R3’s membership fee for its members makes up $250,000 per year. As of the summer 2016, the accounting giant Ernst & Young evaluated R3 consortium between $150 million to $200 million, figuring in membership fees of its 42+ member banks at the time (that number now stands near the 70 mark) with more revenue expected from blockchain solutions in the future.

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