AI: Sovereignty, Kill switch and a Human in the loop.

My AI journey continues.

I am a very happy personal user of AI. I have aligned myself, for now, with Anthropic. In early June I was enjoying using Fable 5, until it was abruptly and I mean very abruptly, disabled. (This was sharp - what was there the night before was gone the next morning).

The US government, citing national security authorities, has issued an export control directive to suspend all access to Fable 5 and Mythos 5 by any foreign national, whether inside or outside the United States, including foreign national Anthropic employees. The net effect of this order is that we must abruptly disable Fable 5 and Mythos 5 for all our customers to ensure compliance.
https://www.anthropic.com/news/fable-mythos-access

Anthropic was not alone, OpenAI soon after imposed similar restrictions.

The Economist was quick to pick up the thread of sovereign risk in AI models.
(sorry, for non-subscribers, this link is behind a pay wall: 
https://www.economist.com/international/2026/07/16/sovereign-ai-independent-of-america-and-china-is-a-pipe-dream)

The European Union currently relies on non-EU countries for over 80% of key digital products, services, infrastructure, and intellectual property. The EU has also seen the need to foster home grown AI models as part of the EU Digital Strategy.
(https://digital-strategy.ec.europa.eu/en/policies/eu-tech-sovereignty)

When looking at sovereignty, you can begin to unpack the AI layers.
Hardware: Who makes the chips? (e.g. Nvidia)
Software: Who provides open source LLM's?
Infrastructure: Who powers and connects the grid to the data centres?
Operators: Where are the engineers to implement and operate the systems?

At issue, is that a sovereign intervention at any of these layers (e.g. trade sanction, executive order etc.) can act as a 'kill switch'. For the avoidance of doubt, this is a kill switch, with the same intent as MiFID Article 48....but with a completely different interpretation and application.

As Sarah Breeden, BoE Deputy Governor for Financial Stability observed..."whether guardrails are needed, analogous to circuit breakers or kill switches that would limit or stop trading market-wide if faulty AI models cause market meltdown."
https://www.bankofengland.co.uk/speech/2026/june/sarah-breeden-panel-at-the-european-central-bank-forum-on-central-banking-2026

Sovereignty doesn't require reinventing every layer of the stack from scratch. A common denominator — be it shared standards, shared hardware even — can sit underneath, while each region retains its own implementation, data residency, and control over the AI model (and indeed kill switch).

Hopefully my Venn diagram makes sense. 
a) There are many models. In my personal experience, the models require training, and saving (so the lessons are not lost / forgotten / purged). Models can hallucinate, report to please, act selfishly or maybe even act in a herd mentality (requiring a kill switch).
b) These models all rely on the data sets they are fed. As it ever was, poor data in will lead to bad results out. Getting you data in good order is a problem that is not going away.
c) AI makes very fast and at times very convincing arguments. But, fluent and confident when the response is wrong or fabricated is dangerous. Some things, like sentimental value, unless taught to a model, may lose all meaning.
Your portfolio may have an element of physical gold, part of an inheritance, that is a non-negotiable hold. AI, unless informed otherwise, could make a very rational position to re-balance that position. 

We need AI. We also need intuition, sentiment, process and control. A human in the loop.

AI Landscape - Hello Claude

 AI - Hello Claude!

This FIX article caught my attention. For me, it is a real example of where, and how quickly barriers to market entry are changing:

The FIX Trading Community, the industry association that manages the world’s trading language, the FIX Protocol, has released a comprehensive manual on digital assets and blockchain technology for finance professionals.
https://lnkd.in/eRW6cZhB

And who do I think is going to do the heavy lifting? Hello Claude! (and it is time for me to start training my iteration of Claude).

But why did I choose Claude?

I wasn't sure where to commence my AI journey. What I am certain of, is the need to test the waters and what better way than to dive in and start swimming? (Yes, I have been tinkering with the free versions).

Right now, I am less worried about Image and Video (Multimodality) than day to day functionality. So I immediately ruled out Dall-e, Adobe Firefly, Luma, HeyGen et al.

The core models I considered were (table included in image).

I also did some asking around.

I felt women challenged the models both functionally and 'personally', (to include incorporating opinions and thoughts). I felt men challenged the models in more of a this <problem>, then <solution>. It does make me wonder about gender and confirmation bias - a balance I hope AI brings rather than polarises.

I am also part of the Google open source family. So I was a little bias to Gemini. On a more general query Gemini advised me that "Quantitative Risk Management by McNeil, Frey, and Embrechts" underpins my methodology. This is a real book - but I must confess I have not read it. I also doubt that I have as many inherent insights as the 3 authors (however I have taken the hint to add it to my reading list!)

So, the answer for me, for now, is Claude.

Hello Claude - Let's get at it!

And that...is three, for me.

Note: This post was originally published on LinkedIn on May 13th, 2025
 
Well, after a long germination, a lot of preparation, a mass of external dependencies and the collaborative efforts of many, from authorisation to testing...we're done, and we're Live!

No chance to do justice to the many that have helped us get here - be it the regulatory framework we operate in, our investors, the vendors that provide our distribution, our launch Participants or the people that got us here - our own dedicated staff.

Institutions now have access to crypto derivatives in a decoupled transaction value chain - segregation of price discovery (market GFO-X), counterparty (CCP LCH ), and settlement (cash) risks. A regulated product offering certainty, finality and recourse.

Now the next part of our journey begins. See you a trade show soon!
And if you're at TradeTech in Paris this week - look us up.

...and that makes 3 for me!

Is it a security? Does it matter?

 

Note: This post was originally published on LinkedIn in July 2024

Is it a security? Does it matter?

I didn’t manage to make it to the Bitcoin conference in Nashville in July, but they did kindly make some of the transcript and recording available.
(A - All links in comments below).

I did tune into Trump’s speech. The man knows how to read the room. At the 26 minute mark he states he will fire Gensler on his first day in office. Predicably, the bitcoin audience applauds. What struck me, was when Trump categorically repeated the claim, the audience spontaneously starts a Trump chant. (B)

The Democrats don’t want to cede the issue. Schumer said during the Crypto4Harris livestream. “My goal is to get something passed out of the Senate and into law by the end of the year, and I believe we can make that happen.” (C)

What supports this argument? Well, it is Form 13F season (D).
Wisconsin Becomes The First State to Buy Bitcoin (BTC), These 3 States May Be Next. (E). “While some entities, such as MicroStrategy (MSTR), have taken the route of investing in bitcoin directly, others, such as the State of Wisconsin, have begun investing indirectly.” (i.e via the ETF). So now we have the US States building their exposure to BTC.

But what about those that want indirect exposure to BTC? Who’s getting exposure to BTC via MicroStrategy (MSTR)? Some interesting names including Norges bank, the Swiss National Bank, The National Pension Service of South Korea and The State Board of Florida Retirement amongst others. (Full register may be behind a paywall – see also F)

So, will the debate rage on in the US. Yes.
Has it moved from if, to when. Yes. And sooner rather than later.

Certainty, Finality and Recourse

 

Note: This post was originally published on LinkedIn in Feb 2024

Certainty, Finality and Recourse.

All things we take for granted in TradFi. But can we be so sure of these TradFi comforts when we explore services from other jurisdictions and unfamiliar regulators? (if they are even regulated at all!)

Last week FATF reaffirmed their unwavering commitment to combat financial crime (1).
[Please note, all links in comments].
“Depriving criminals of their ill-gotten gains is crucial to fighting the scourge of money laundering and financial crime,” said FATF President T. Raja Kumar.

So how do you deprive someone of their ill gotten gains? In the UK, we would jump to the Proceeds of Crime Act (POCA) (2). As the CPS likes to say – crime doesn’t pay!(3). To reinforce this message, last week also saw the National Crime Agency get their new powers to seize and freeze digital assets. (4)

But before you jump to any conclusions, let’s not forget certainty, finality and recourse. To have this, you need a legal framework. And the UK has been busy putting this in place too.

Last year the UK law commission published their findings on Digital Assets. (5) which resulted in a short consultation earlier this year “Digital assets as personal property” (6).

The crux of the issue is defining what is this digital thing, this crypto asset? First of all there is the important recognition that these digital things are property. Property rights are powerful because, in principle, they are recognised against the whole world, whereas other — personal — rights (such as contractual rights) are recognised only against someone who has assumed a relevant legal duty.

Since the 19th Century, the law of England and Wales traditionally recognised two distinct categories of personal property rights: (i) rights relating to “things in possession” (tangible things, e.g. bag of gold, bike, laptop); and (ii) rights relating to “things in action” (legal rights or claims enforceable by action e.g. IoU, debts, shares).

However, in an increasingly digital world, common law has had to deal with things like milk quotas, carbon emissions…and other ‘things’ such as crypto-tokens which are created through software. The UK has come to the conclusion that there is such a third type of personal property - right relating to a “third thing”.

And guess what, the UK is not alone.
Courts in other jurisdictions have reached the same (or a similar) conclusion. Courts across the common law world, including in Australia, Canada, Hong Kong, New Zealand, Singapore, and the United States, now consistently proceed on the basis that crypto-tokens are capable of being objects of personal property rights. Examples of this can also be seen in some civil law-based systems, including Japan, Liechtenstein, and Switzerland. (5) & (7)

So trade with certainty. You have finality. And recourse?...it’s a third thing.

P.S.
For those that are in London at the DigiAssets event next week, please do stop by and say Hi.

hashtag#BTC hashtag#Futures hashtag#Options hashtag#Derivatives

1. FATF Ministers commit to stepping up efforts to fight money laundering, terrorist and proliferation financing (fatf-gafi.org)
2. Proceeds of Crime Act 2002 (legislation.gov.uk)
3. Proceeds of crime | The Crown Prosecution Service (cps.gov.uk)
4. New powers to seize cryptoassets used by criminals go live - GOV.UK (www.gov.uk)
5. Law Commission Documents Template (cloud-platform-e218f50a4812967ba1215eaecede923f.s3.amazonaws.com)
6. Feb-2024-digital-assets-and-personal-property-CP.pdf (cloud-platform-e218f50a4812967ba1215eaecede923f.s3.amazonaws.com)
7. The Singapore High Court rules that Crypto Assets are “things in action” capable of being held on trust: ByBit Fintech Ltd v Ho Kai Xin and others [2023] SGHC 199 | Inside FinTech | Global law firm | Norton Rose Fulbright