Freedom from regulatory capture…

𝘌𝘷𝘦𝘳𝘺 𝘵𝘪𝘮𝘦 𝘴𝘰𝘤𝘪𝘦𝘵𝘺 𝘪𝘯𝘤𝘳𝘦𝘢𝘴𝘦𝘴 𝘵𝘩𝘦 𝘧𝘳𝘦𝘦𝘥𝘰𝘮 𝘰𝘧 𝘢 𝘤𝘦𝘳𝘵𝘢𝘪𝘯 𝘢𝘴𝘱𝘦𝘤𝘵 𝘰𝘧 𝘪𝘵 𝘰𝘳 𝘢 𝘨𝘳𝘰𝘶𝘱 𝘸𝘪𝘵𝘩𝘪𝘯 𝘪𝘵, 𝘵𝘩𝘢𝘵 𝘴𝘰𝘤𝘪𝘦𝘵𝘺 𝘢𝘴 𝘢 𝘸𝘩𝘰𝘭𝘦 𝘢𝘥𝘷𝘢𝘯𝘤𝘦𝘴.

Freedom of speech, freedom from slavery, freedom of the press, freedom for all to vote, and the ability to communicate freely with people all over the world via the Internet have all had meaningful and positive implications for society. Each one of these changes to the status quo were resisted vigorously at the time yet with hindsight few will disagree with their net positive effect.

Freedom to transact.

The ability for anybody and everybody to exchange value in a trustless and permissionless fashion will be equally transformative. Notwithstanding, all the shenanigans and grifts that have plagued crypto as a sector to date, I believe these are mere growing pains to something that remains very worthwhile and in fact, can only be achieved in this grass-roots manner (no matter how painful).

The reason that it must be grass-roots led is simple: The incumbent “TradFi” system, comprising all financial services providers (e.g. banks, insurers, asset managers, exchanges, custodians etc) is the largest and most influential sector on the planet and continues to grow in both size and influence. The idea that these incumbents will voluntarily let go of this influence and power for the sake of a better tech stack or societal progress is to them as comical as the belief that it is actually possible.

Yet the introduction of global (borderless), permissionless, decentralized, monetary networks in combination with the ability to self-custody (digital) assets tested at scale in multiple shapes & sizes (PoW vs. PoS, zk vs. optimistic, L1 vs. L2, etc.) in what is today mostly a token casino, does exactly that and to be frank there is not much the incumbents can do to stop it at this stage, though try they will.

There can be no doubt that institutional and regulatory capture in TradFi is driving out competition and innovation, with ever-increasing institutions with ever greater regulatory hurdles to compete in the global world of finance (all still working on the tech stack of the late 70’s early 80's). What’s more, because finance is so intricately interwoven with the power of Governments and the taxable base of a nation-state it seems there is little to no incentive to reduce the amount of institutional and regulatory capture and way too many reasons to maintain it. To “protect” the consumer, to “prevent” criminals and money launderers from using the financial system for their ill-gotten gains and more of such “wokeness” that saddles the TradFi system with the ever-increasing regulatory burden, none of which it was built to deal with efficiently.

The answer, therefore, must come from outside of the system… A grassroots movement to show (in practice) that there is a better way. Now that we have built and tested the financial primitives through multiple market cycles (especially in DeFi) its time to get serious and connect these primitives to the real world to build actual use cases that serve users as opposed to the scammers & degens that helped us test them and make them robust.

One such use case is tokenizing Real Word SME loans whereby we; 1) create an attractive risk/reward yield product to provide the crypto ecosystem with a yield product that is uncorrelated to crypto without it being a back door to funding the Government, 2) enabling crypto to function as an alternative (and possibly even countercyclical) source of funding for the SME funding gap that is prevalent and growing worldwide and lastly, 3) creating a crypto native savings product to help drive adoption through onboarding low yielding bank deposits. What we like to call a triple whammy.

Creating an Alternative to rent-seeking banks.

A classic depiction of rent-seeking is a man putting a chain across a river on his property to seek a toll for lowering the chain for passage… No value is created by imposing the chain but rent is extracted, governments/regulators are happy as long as they get their cut and society has a way of continuing. Clearly abolishing the chain would be better for society as a whole but the rent seekers and the regulators they feed are probably going to be the last people to accept such wisdom.

At Florence we are not into politics, we are into freedom. Freedom to transact, freedom to choose, and freedom to opt-out. and if we can contribute to solving the SME funding gap whilst enhancing said freedoms we are winning.