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There are few ancient civilizations with more lasting impact on the modern world than that of the Roman Empire. At its peak, Roman power stretched across nearly 2 million square miles of Europe & Africa and governed 20% of the Earth’s population. Major advances in science, technology, military design, philosophy & literature trace their way back to ancient Rome’s ruling elite.
The height of Rome’s 1,000 year reign is marked by a ~200 year period of peace & prosperity known as Pax Romana, when a long series of emperors maintained & expanded Rome’s power to its maximum strength. Pax Romana marked one of the longest stretches of relative peace in ancient history, paving the way for unprecedented levels of international trade, population growth & standard of living increases. Historians have applied this term to subsequent periods of global superpower-induced peace & progress - Pax Britannica for Great Britain’s dominance in the 19th century and Pax Americana for the post-WWII era under US influence.
Like ancient & modern civilizations, market structure has experienced its own version of Pax Romana. Transformative regulation in the wake of the 2008 financial crisis brought about an era of unprecedented prosperity for exchanges & their partners around the world. While aggressive regulation can be stifling & downright destructive for certain groups like banks or participants in opaque, analog markets, they can be a generational wealth opportunity for those who benefit. In this case, those beneficiaries have clearly been exchanges & early electronic traders.
I bring up this idea of a market structure Pax Romana because I believe a new era of transformative regulation may be about to begin, with specific firms set up for tremendous benefit while others fall behind. The potential for a renewed US regulatory crackdown on multiple market structure fronts has been hinted by the SEC for some time now, with crypto in particular as an increasingly clear target. SEC head Gary Gensler was heard labeling most - if not all - crypto tokens as securities as recently as a couple weeks ago. If a US crypto crackdown is on the horizon, the vast majority of related companies & projects may be in for a rude awakening in 2022.
There is one company, however, that shouldn’t be shaking in Gensler’s shadow. This company doesn’t run Super Bowl ads & has no stadium naming rights. They’re not the flashiest or the most valuable. They do, however, boast one of the strongest networks of institutional partners, the cleanest regulatory track record of any firm in the industry, and an impressive suite of products with a clear path to TradFi disruption. Their name is Paxos, and they have the potential to emerge from a global crypto crackdown as one of the most systemically important firms in the space.
In this post, I detail how Paxos compares to the crypto heavyweights we hear about on a daily basis, the long path that prepared it for regulatory dominance, and the technology that could soon underpin the trading of much more than just cryptocurrency. Paxos Romana - a sustained period of institutional demand for crypto in the wake of new regulation, with Paxos as its primary beneficiary - may be just around the corner.