NEW YORK (Reuters) - A partnership between Belgium-based settlement provider Euroclear and U.S. startup Paxos to develop a blockchain-based service for the London gold market has been dissolved, the companies said on Thursday.

An employee places gold bars in the Kazakhstan's National Bank vault in Almaty, Kazakhstan, September 30, 2016. REUTERS/Mariya Gordeyeva

The joint venture, which had been announced in June 2016, aimed to develop a new system to settle London bullion by using Paxos’ Bankchain technology.

Euroclear, one of the world’s largest settlement houses, will no longer be working with Paxos on the project, Christine Vanormelingen, global head of communications and investor relations at Euroclear, said in an interview.

“Not all of the startup collaborations come to a conclusive end, that is part of how you develop an innovation strategy,” she said. “We remain committed to offering a solution to the London bullion market.”

Paxos, which grew out of itBit, will continue to pursue its platform without Euroclear, which it plans to launch by 2018, according to a statement.

The joint system had already been tested with at least 16 market participants, including Citigroup Inc, Societe Generale, Scotiabank and INTL FCStone Inc.

The project aimed to make settlement of unallocated gold less capital-intensive for banks and other market participants by using blockchain technology.

Blockchain, which first emerged as the system underpinning cryptocurrency bitcoin, is a distributed record of transactions that is maintained by a network of computers on the internet without the help of a trusted third party.

Financial institutions have been investing large sums of money and partnering with startups globally to test whether the technology can be used to simplify some cumbersome processes such as securities settlement.

The Euroclear and Paxos pilot had been one of the most ambitious projects to be announced.

While excitement around blockchain has not abated on Wall Street, the technology has yet to be deployed at scale in mainstream financial markets, with skeptics warning that its potential may have been hyped.

Proponents say the technology is still in its early days and that its major challenge in financial markets is getting groups of large institutions to agree to significant changes in their processes.