Dex in the City features three hosts: Jesse, a former Web3 prosecutor now at Ribbit Capital; V, a former SEC enforcement attorney turned Web3 advocate; and KK, a trad-fi and deep-tech specialist at Starkware. The show covers crypto law, regulation, and technology at the intersection of policy and innovation.

This episode tackles five distinct topics: the government-forced shutdown of Anthropic's Fable-5 AI model and its implications for tech censorship; the CFTC's sweeping 300-page notice of proposed rulemaking on prediction markets; the SEC's proposed repeal of Reg NMS Rules 611 and 610 and what it means for on-chain securities markets; the emerging tokenized shares race led by Citi and Coinbase; and a lighthearted look at Jurassic Finance, a project tokenizing dinosaur bones and fossils. V also references her paper Fairness by Design Verifiable Execution in On-Chain Markets to frame the Reg NMS discussion around crypto-native approaches to investor protection.

Anthropic's Fable-5 Shutdown: Censorship, KYC, and the AI Chokepoint

The federal government forced Anthropic to take Fable-5 and Mythos-5 offline globally just days after release, with the administration citing concerns that foreign nationals — including Anthropic employees — could access the model.

Fable-5 was designed as a safer version of Mythos, which Anthropic had previously withheld from public release due to cybersecurity fears — including the potential for illicit actors to hack banks or government systems using the model's capabilities.

Amazon, an Anthropic investor and AI competitor, reportedly raised White House concerns that Fable's guardrails could be bypassed — but Anthropic and cybersecurity experts dispute this, noting similar bypasses exist in other models including open-source ones outside the US.

Jesse notes: 'There is no evidence that they brought in national security experts or technical folks into the conversation.'

Open-source models abroad may already have these bypasses enabled, meaning the shutdown could undermine US cybersecurity competitiveness.

Jesse frames the shutdown as a KYC story for AI: 'Maybe this all is just the administration inventing KYC for AI and for all of tech' — with no transparent process, no notice and comment, and no clear technical grounding.

Jesse draws an explicit parallel to the Gensler-era SEC: 'No clear rules, shifting standards. You find out where you cross the line after the shutdown order arrives, you get a subpoena.'

Conflicting public statements from Pete Hegseth and David Sacks — plus an unverified claim that CEO Dario Amodei was unreachable at a wellness retreat — have muddied the narrative with no definitive explanation for the shutdown.

KK raises zero-knowledge proof technology as a potential cryptographic solution to some of the surveillance and data protection concerns raised by the AI access debate, though Jesse confirms the AI and crypto industries are not currently in dialogue on this.

Jay Clayton, former SEC chair and interim SDNY US Attorney, is expected to be rapidly confirmed as Director of National Intelligence — making the Anthropic situation potentially one of his first focus areas.

CFTC's 300-Page Prediction Markets Rulemaking: What Changes and What Doesn't

The CFTC released a nearly 300-page notice of proposed rulemaking on prediction markets following an earlier advanced notice that generated approximately 3,500 public comments — with only a 45-day window to respond after Federal Register publication.

The proposed rule amends Rule 4011, which previously prohibited event contracts involving 'terrorism, assassination, wargaming, or an activity that is unlawful under any state or federal law,' replacing it with a structured public interest determination framework.

The CFTC may now make a public interest determination that specific contracts are violative.

Contracts can continue trading during review, and if no review is triggered, they are cleared automatically.

The rule fully clears the path for political election event contracts, which KK supports: 'There's hundreds of years of history in the United States of people betting on political events. It's not against the public interest.'

KK's read on outcomes: betting on player injuries in sports will likely fail the public interest test, but contracts on final scores should be permissible under the new gaming definition.

Jesse raises a structural concern: the rule relies heavily on industry self-certification, and with a depleted CFTC staff, enforcement capacity to review self-certified contracts is uncertain — potentially creating problems that only surface after consumer harm occurs.

The Commodities Exchange Act explicitly allows a single remaining commissioner to exercise all commission powers, contrasting with the SEC's quorum requirement of approximately 3 commissioners for official action.

All three hosts encourage market participants — not just lawyers — to submit public comments, noting that regulators genuinely review the full spectrum of input and that thematic patterns across comments do influence final rules.

SEC Repeals Reg NMS Rules 611 and 610: Opening the Door for On-Chain Securities

The SEC proposed repealing Rules 611 and 610 of Reg NMS — rules in place for two decades that organize US stock markets around the National Best Bid and Offer (NBBO) to ensure customers receive the best available price across all exchanges.

Rule 611 prohibits executing trades at a worse price when a better price is available elsewhere.

Rule 610 prevents compatible bids and offers on different exchanges from failing to match due to fragmentation.

V argues the repeal could remove a real structural barrier to tokenized equities: 'An AMM like Uniswap doesn't look at every other exchange before it trades. It just prices against a liquidity pool and then it executes automatically' — forcing AMMs to comply with Reg NMS would mean rebuilding the old system on a blockchain.

As V argues in Fairness by Design Verifiable Execution in On-Chain Markets, best execution is far more complex than achieving the best displayed price — customers and institutions also weigh speed, privacy, certainty of fill, market impact, and information leakage, factors that traditional broker routing handles opaquely and retrospectively.

Fairness by Design Verifiable Execution in On-Chain Markets contends that crypto markets have developed design-based tools — solver auctions, private transaction channels, programmable sequencing rules, and cryptographic attestations — that can demonstrate execution quality to investors and regulators in real time, something impossible in traditional markets.

KK notes that SEC Chair Atkins dissented from the original Reg NMS adoption in 2005, arguing competitive forces should solve fragmentation rather than regulation — making the current repeal a full-circle moment for his regulatory philosophy.

V cautions against assuming competition alone will protect investors post-repeal: 'I want crypto market participants to weigh in, especially projects that aren't just leaving it to market forces' — the 60-day comment period is an opportunity to advocate for crypto-native investor protection by design.

Tokenized Shares Race: Citi, Coinbase, and the Legal Infrastructure Gap

The Wall Street Journal reported Citi was 'rolling out tokenized shares of private companies,' but Citi's own press release uses the term 'tokenized depository receipts' — a legally significant distinction since these are receipts, not actual shares.

During the recording, news broke that Coinbase is entering the tokenized stock space with on-chain shares and dividend payments, with investors reportedly owning actual shares and receiving dividends.

KK's core concern: 'Tokenization has moved so fast that there has been no time for the legal infrastructure vis-à-vis tokenization to catch up' — raising unresolved questions about transfer agents, issuer buy-in, and securities law compliance.

The primary hope for tokenized securities is increased liquidity, particularly for institutions, endowments, and family offices — accredited investors who are easier to accommodate under existing securities law frameworks.

Jesse flags issuer buy-in as the critical variable, citing past failures with X stocks and SpaceX IPO promises where issuers did not ultimately support what had been offered to customers.

The SEC's still-pending innovation exemption is widely rumored to address tokenized securities, but its breadth and depth remain uncertain — the hosts are waiting to see how surgically it will be applied.

Jurassic Finance: Tokenizing Dinosaur Bones on the Blockchain

Jesse introduces Jurassic Finance, a project claiming to tokenize dinosaur bones and fossils as 'Earth's rarest asset,' allowing on-chain ownership with fossils loaned to museums — complete with a token ticker called RAWR.

The hosts explicitly do not endorse the project and flag potential scam risk, with one unnamed contact describing it as looking like 'a black market for dinosaur bones.'

Jesse frames it as a genuine use case for tokenization of physical rare assets, while acknowledging she will monitor it closely before any personal participation.