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[00:01]
Podcast Host
Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 countries operate like a local everywhere. Visit deel.com WSJ.
[00:21]
J.R. Whelan
With your Money briefing. I'm J.R. whalen at the Wall Street Journal in New York. There's cryptocurrency, there's bitcoin, and then there's the crypto mom. We'll explain who she is in a moment. First, these money and market stories you should know the cost of renting housing shot up last year, offering residential landlords a respite before another crush of new apartment supply hits the market. This year, rents rose 3.3% in the fourth quarter of 2018. That's 2.5% higher than during the same period in 2017, in the best performance since 2015. The Journal's Real Estate Bureau reports that rent growth is now hovering just above the long term average of nearly 3%, indicating the market is fairly evenly balanced between landlords and tenants. This year, developers are expected to complete another 319,000 new units. That's up from this year's still aggressive figure of 287,000 units. That's the largest influx of new apartment supply in roughly three decades. And for those buying a house for the first time looking for a loan, one of their first phone calls isn't to Chase or Wells Fargo. It's to mom and Dad. A little more than a quarter of mortgage borrowers who used FHA insured loans got assistance from a relative to make the down payment in the 12 months through September of last year. That's up from about 22% in 2011. Now, though, the pace of home price growth has slowed. Prices are still consistently rising year over year, and higher mortgage rates are making buying more expensive. But homeowners who get help with their down payments have generally been viewed as riskier because they have sunk less money into their property and thus have less to lose by walking away if home prices drop or if they're laid off from their job. The FHA says that since September 2011, 7.6% of those in which a family member helped with with the down payment are now delinquent for 90 days or more. That's above the 5.2% rate for FHA homeowners who do not get assistance. But it's less than the 9.3% rate for those who got assistance from a party besides a relative or the government. Cryptocurrency investors face a lot of heat and frustration. Precipitous declines in currency values, a Lack of broad government oversight and a fuzzy crystal when it comes to the future of crypto startups and currencies. But they do have a crypto mom. Who is the crypto mom? Well, Wall Street Journal financial regulation reporter Dave Michaels is on the line with us with some details. So Dave, just help us understand who Hester Peirce is. She is known by some as the crypto mom. She sits on the securities and Exchange Commission and she's a Republican.
[03:09]
Dave Michaels
That's right. She is a relatively new SEC commissioner who got this nickname crypto mom shortly after she was only SEC commissioner to support what would have been an exchange traded fund tracking the price of bitcoin that was offered or at least conceived of as an investment product by the Winklevoss brothers, earlier of Facebook fame. And the SEC rejected the idea of this etf. But Commissioner Peirce was the only commissioner who said that it should have been allowed to be marketed and sold. And she issued a very long dissent explaining why she thought the SEC got it wrong and that that this happened back in the summer. It really got portions of the crypto market really jazzed about about her reasoning and the potential for her sort of advocacy for their point of view at this regulatory agency.
[04:02]
J.R. Whelan
Yeah, I would imagine they're very excited bitcoin enthusiasts trying to launch funds that would bring the cryptocurrency to small investors. Having rejected at least 10 times by the SEC, many of the big banks also don't want to dip their toes into the crypto waters at all. But to hear that they've got some support on the inside, I think your word jazzed seems appropriate.
[04:23]
Dave Michaels
That's the status that she's gotten, this status within the market, which is, I mean, that's a fairly amorphous term. I realize there are lots of different types of investors and participants in this in the crypto market, from, you know, from just the pure bitcoin sort of traders and speculators to those that are deeper into the blockchain ecosystem, but sort of across the board. They view her as a commissioner who gets it, who's willing to be more tolerant of innovation and some of the sort of eggs that they're breaking as they try to figure out how to adapt this new technology to financial markets.
[05:03]
J.R. Whelan
Now, she's also run into some trouble with the way that she has interacted with some of the SEC's enforcement attorneys just in terms of maybe not having the softest approach to bedside manner.
[05:16]
Dave Michaels
Yeah, it's no mistake that she's the only commissioner who has been sort of as she put it in the story, in a quote we got from her, she said she thinks it's okay to hold the hand of these crypto entrepreneurs. It's no mistake. She's the commissioner who says that. She's also the commissioner who pushes back most often when against the enforcement division of the sec, when she thinks their cases sort of go too far, punishing public companies or individual executives. And she has said some things behind closed doors that were perceived basically as denigrating the work of the enforcement division. She was too tough in sort of raking them over to Kohl's about the case that they were bringing. And in some cases, she's. From our reporting, we've learned she had to later apologize for some of the things that she said to them.
[06:10]
J.R. Whelan
And she also has quite a background in taking sides in economic policies. She's criticized the Dodd Frank law, for example, pretty vociferously in position papers and things that she's issued.
[06:23]
Dave Michaels
She's relatively unique as a commissioner. Commissioners come from all walks of life. Some of them are real specialists. They've practiced securities laws, working on, you know, deals or working for stock exchanges or for money managers. She is more of a creature of Washington, even though she has worked at the SEC as a staff member, very early in her career, she worked on Capitol Hill. She was. She is a Republican. She's written widely and broadly on the finance, on the congressional response to the financial crisis. And her views are. They're so on point for Republicans who think that. That the response was wrong, that some of her writings are viewed by Republicans as sort of the tome for how Washington got it wrong in 2008.
[07:18]
J.R. Whelan
And in your story in the Wall Street Journal, you mentioned that the SEC has cracked down in the past year on deals known as initial coin offerings, or ICOs, essentially the equivalent of an IPO in the cryptocurrency world. And Hester Peirce has sometimes questioned whether defendants in those processes understood how their sale of tokens might be deemed a security.
[07:42]
Dave Michaels
She has been more sympathetic to the individuals involved in these deals. She. From what. From what the reporting that we did, she wouldn't get into individual cases with us, but from other sources, you know, they told us she has really questioned whether these individuals who are not these aren't Wall street people. They didn't grow up as regulated stockbrokers. She's questioned whether they really understood how the law or the rules applied to what they were doing. And so I don't know that she's like, she's not. I wouldn't say she's pro ico. I think she wants these deals to be done legally and in a regulated fashion. But she's more tolerant of mistakes that these entrepreneurs make as long as they're not ripping people off.
[08:31]
J.R. Whelan
And so that really does play to the thought that, you know, we've seen a precipitous drop in cryptocurrency values, maybe something like 80% for Bitcoin as to where it was a year ago. But this cryptocurrency entity, this cryptocurrency world is moving forward in some form or another. And like you said, a lot of the people involved here are not career investors. They're not career Wall street people. And maybe someone to hold their hand, to learn the lay of the land is something that they need to move.
[08:58]
Dave Michaels
They definitely need engagement with the regulator, regulatory agencies, because when this industry launched, it didn't have basically ignored how these traditional financial regulations might apply to what they were doing. So they need gatekeepers that they can approach and rely upon. They need regulators who can give them feedback about what they're doing, because some of these projects are extremely complicated and don't sound at all like your traditional stock or bond sale. The question with Commissioner Purse, what is her influence? She's one of five commissioners, and she doesn't set the agenda. She's there fighting, you know, here and there, maybe helping them out at the margins. As long as she's a commissioner, she won't dictate the policy. But, you know, who knows? The two or three years down the line, it sort of depends who's in the White House. You know, she could be in a position of more prominence. You know, the Republicans like her. Who knows? She could be chairman someday. I wouldn't. I wouldn't place any bets on that. It's very hard to predict who becomes chairman in the future, but she has a lot of fans. And you could imagine in the future if there was a vacancy in that office, there probably would be some Republicans pushing to see her put into it.
[10:20]
J.R. Whelan
All right, that is Wall Street Journal reporter Dave Michaels joining us on the line from our Washington bureau. Dave, thanks for being with us.
[10:25]
Dave Michaels
Yeah, thanks for having me on.
[10:27]
J.R. Whelan
And that's your money briefing. I'm J.R. whelan in New York for the Wall Street Journal.
[10:31]
Podcast Host
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen @schwab.com washingtonwise.

Summary5 min read

WSJ Your Money Briefing – Episode Summary

Title: Who Is the CryptoMom, and Why Do Crypto Startups Like Her?
Date: January 7, 2019
Host: J.R. Whelan (The Wall Street Journal)
Guest: Dave Michaels (WSJ Financial Regulation Reporter)

Episode Overview

This episode explores the influence and reputation of SEC Commissioner Hester Peirce, known in crypto circles as "CryptoMom." The discussion centers around her unique position within the regulatory landscape, her advocacy for a more open approach to crypto innovation, and the reasons why she resonates with cryptocurrency startups and enthusiasts. The episode also touches upon her background, regulatory philosophy, and the potential impact she could have on the future of crypto markets.

Key Discussion Points & Insights

Who Is the "CryptoMom"? (03:09)

Hester Peirce is a Commissioner at the Securities and Exchange Commission (SEC), known for her unique, supportive stance toward cryptocurrency innovation.
She earned the nickname "CryptoMom" after being the lone SEC commissioner to support an ETF (Exchange Traded Fund) tracking the price of bitcoin, conceived by the Winklevoss brothers. The SEC rejected the ETF, but Peirce issued a long dissent outlining why she thought it should have been approved.
- Memorable Quote:
  
  “She was the only commissioner who said that it should have been allowed to be marketed and sold. And she issued a very long dissent explaining why she thought the SEC got it wrong... This happened back in the summer.” — Dave Michaels, 03:09

The Impact on Crypto Startups & Enthusiasts (04:02)

Peirce’s dissent and ongoing openness gave hope to those who felt stifled by regulatory uncertainty, energizing segments of the crypto industry.
Her support signals to startups and investors that there is at least one receptive ear inside the SEC, bolstering enthusiasm during a period when most funds and large banks remain wary of cryptocurrencies.
- Notable Moment:
  
  “But to hear that they've got some support on the inside, I think your word jazzed seems appropriate.” — J.R. Whelan, 04:02

Approach to Innovation and Regulation (04:22, 05:15)

Peirce is “willing to be more tolerant of innovation,” understanding that new technology often disrupts existing rules and norms.
- Quote:
  
  “They view her as a commissioner who gets it, who's willing to be more tolerant of innovation and some of the sort of eggs that they're breaking as they try to figure out how to adapt this new technology to financial markets.” — Dave Michaels, 04:22
She sometimes clashes with SEC enforcement staff, pushing back when she believes cases go too far. Known for a blunt style, she has occasionally had to apologize for her criticism.
- Quote:
  
  “She said she thinks it’s okay to hold the hand of these crypto entrepreneurs... she pushes back most often when against the enforcement division of the SEC, when she thinks their cases sort of go too far.” — Dave Michaels, 05:15

Peirce's Background & Regulatory Philosophy (06:09)

Peirce is not a typical commissioner; she is “more of a creature of Washington,” with experience on Capitol Hill and as an SEC staffer.
She has been a vocal critique of Dodd-Frank and other post-crisis congressional policies, aligning closely with the Republican view that these responses were misguided.
- Quote:
  
  “Her views are... so on point for Republicans who think that the response was wrong, that some of her writings are viewed by Republicans as sort of the tome for how Washington got it wrong in 2008.” — Dave Michaels, 06:23

Approach to Enforcement and ICO Crackdowns (07:17)

The SEC has recently intensified its crackdown on Initial Coin Offerings (ICOs)—the crypto equivalent of IPOs.
Peirce often questions whether those targeted by these crackdowns actually understood that their offerings would be classified as securities.
- Quote:
  
  “She has really questioned whether these individuals who are not... Wall Street people... really understood how the law or the rules applied to what they were doing.” — Dave Michaels, 07:42
While not “pro-ICO,” Peirce seeks regulated, legal compliance and is more forgiving of genuine mistakes (as long as there’s no fraud).

The Broader Crypto Landscape & Peirce’s Limits (08:31, 08:58)

The crypto market experienced drastic value drops, but the ecosystem continues to evolve with many newcomers who are not traditional finance professionals.
Peirce is seen as a potential guide for this new community but has limited direct influence as one of five commissioners. However, she could become more prominent if political winds change.
- Quote:
  
  “She’s there fighting, you know, here and there, maybe helping them out at the margins. As long as she’s a commissioner, she won’t dictate the policy. But, you know, who knows? The two or three years down the line, it sort of depends who's in the White House. You know, she could be in a position of more prominence.” — Dave Michaels, 08:58

Notable Quotes & Memorable Moments

“She was the only commissioner who said that it should have been allowed to be marketed and sold...” — Dave Michaels, 03:09
“They view her as a commissioner who gets it, who's willing to be more tolerant of innovation...” — Dave Michaels, 04:22
“She said she thinks it’s okay to hold the hand of these crypto entrepreneurs...” — Dave Michaels, 05:15
“Her views are... sort of the tome for how Washington got it wrong in 2008.” — Dave Michaels, 06:23
“She’s there fighting, you know, here and there, maybe helping them out at the margins. As long as she’s a commissioner, she won’t dictate the policy.” — Dave Michaels, 08:58

Key Timestamps

03:09 – Introduction to Hester Peirce, "CryptoMom" nickname, and the bitcoin ETF dissent
04:02 – Crypto community’s reaction to Peirce; lack of institutional support for crypto
04:22 – Peirce’s reputation as open to innovation and startup-friendly
05:15 – Peirce’s contentious relationship with SEC enforcement; pushback against tough cases
06:09 – Her unique background, experience, and Republican economic philosophy
07:17 – SEC crackdown on ICOs; Peirce’s perspective on enforcement against crypto startups
08:31 – Peirce’s stance on crypto regulation and her influence at the SEC

Summary

This episode of WSJ’s Your Money Briefing provides a clear portrait of Hester Peirce’s growing influence in the world of cryptocurrency regulation, examining both her policy positions and personal style. Through quotes and context provided by Dave Michaels, listeners learn why the crypto industry has embraced her as “CryptoMom” and how she personifies tension between innovation and regulation on Wall Street. The discussion concludes with the recognition that while her influence is currently limited, her advocacy could become even more significant depending on future political developments within the SEC.

Loading summary

Transcript17 lines

[00:01]
Podcast Host
Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 countries operate like a local everywhere. Visit deel.com WSJ.
[00:21]
J.R. Whelan
With your Money briefing. I'm J.R. whalen at the Wall Street Journal in New York. There's cryptocurrency, there's bitcoin, and then there's the crypto mom. We'll explain who she is in a moment. First, these money and market stories you should know the cost of renting housing shot up last year, offering residential landlords a respite before another crush of new apartment supply hits the market. This year, rents rose 3.3% in the fourth quarter of 2018. That's 2.5% higher than during the same period in 2017, in the best performance since 2015. The Journal's Real Estate Bureau reports that rent growth is now hovering just above the long term average of nearly 3%, indicating the market is fairly evenly balanced between landlords and tenants. This year, developers are expected to complete another 319,000 new units. That's up from this year's still aggressive figure of 287,000 units. That's the largest influx of new apartment supply in roughly three decades. And for those buying a house for the first time looking for a loan, one of their first phone calls isn't to Chase or Wells Fargo. It's to mom and Dad. A little more than a quarter of mortgage borrowers who used FHA insured loans got assistance from a relative to make the down payment in the 12 months through September of last year. That's up from about 22% in 2011. Now, though, the pace of home price growth has slowed. Prices are still consistently rising year over year, and higher mortgage rates are making buying more expensive. But homeowners who get help with their down payments have generally been viewed as riskier because they have sunk less money into their property and thus have less to lose by walking away if home prices drop or if they're laid off from their job. The FHA says that since September 2011, 7.6% of those in which a family member helped with with the down payment are now delinquent for 90 days or more. That's above the 5.2% rate for FHA homeowners who do not get assistance. But it's less than the 9.3% rate for those who got assistance from a party besides a relative or the government. Cryptocurrency investors face a lot of heat and frustration. Precipitous declines in currency values, a Lack of broad government oversight and a fuzzy crystal when it comes to the future of crypto startups and currencies. But they do have a crypto mom. Who is the crypto mom? Well, Wall Street Journal financial regulation reporter Dave Michaels is on the line with us with some details. So Dave, just help us understand who Hester Peirce is. She is known by some as the crypto mom. She sits on the securities and Exchange Commission and she's a Republican.
[03:09]
Dave Michaels
That's right. She is a relatively new SEC commissioner who got this nickname crypto mom shortly after she was only SEC commissioner to support what would have been an exchange traded fund tracking the price of bitcoin that was offered or at least conceived of as an investment product by the Winklevoss brothers, earlier of Facebook fame. And the SEC rejected the idea of this etf. But Commissioner Peirce was the only commissioner who said that it should have been allowed to be marketed and sold. And she issued a very long dissent explaining why she thought the SEC got it wrong and that that this happened back in the summer. It really got portions of the crypto market really jazzed about about her reasoning and the potential for her sort of advocacy for their point of view at this regulatory agency.
[04:02]
J.R. Whelan
Yeah, I would imagine they're very excited bitcoin enthusiasts trying to launch funds that would bring the cryptocurrency to small investors. Having rejected at least 10 times by the SEC, many of the big banks also don't want to dip their toes into the crypto waters at all. But to hear that they've got some support on the inside, I think your word jazzed seems appropriate.
[04:23]
Dave Michaels
That's the status that she's gotten, this status within the market, which is, I mean, that's a fairly amorphous term. I realize there are lots of different types of investors and participants in this in the crypto market, from, you know, from just the pure bitcoin sort of traders and speculators to those that are deeper into the blockchain ecosystem, but sort of across the board. They view her as a commissioner who gets it, who's willing to be more tolerant of innovation and some of the sort of eggs that they're breaking as they try to figure out how to adapt this new technology to financial markets.
[05:03]
J.R. Whelan
Now, she's also run into some trouble with the way that she has interacted with some of the SEC's enforcement attorneys just in terms of maybe not having the softest approach to bedside manner.
[05:16]
Dave Michaels
Yeah, it's no mistake that she's the only commissioner who has been sort of as she put it in the story, in a quote we got from her, she said she thinks it's okay to hold the hand of these crypto entrepreneurs. It's no mistake. She's the commissioner who says that. She's also the commissioner who pushes back most often when against the enforcement division of the sec, when she thinks their cases sort of go too far, punishing public companies or individual executives. And she has said some things behind closed doors that were perceived basically as denigrating the work of the enforcement division. She was too tough in sort of raking them over to Kohl's about the case that they were bringing. And in some cases, she's. From our reporting, we've learned she had to later apologize for some of the things that she said to them.
[06:10]
J.R. Whelan
And she also has quite a background in taking sides in economic policies. She's criticized the Dodd Frank law, for example, pretty vociferously in position papers and things that she's issued.
[06:23]
Dave Michaels
She's relatively unique as a commissioner. Commissioners come from all walks of life. Some of them are real specialists. They've practiced securities laws, working on, you know, deals or working for stock exchanges or for money managers. She is more of a creature of Washington, even though she has worked at the SEC as a staff member, very early in her career, she worked on Capitol Hill. She was. She is a Republican. She's written widely and broadly on the finance, on the congressional response to the financial crisis. And her views are. They're so on point for Republicans who think that. That the response was wrong, that some of her writings are viewed by Republicans as sort of the tome for how Washington got it wrong in 2008.
[07:18]
J.R. Whelan
And in your story in the Wall Street Journal, you mentioned that the SEC has cracked down in the past year on deals known as initial coin offerings, or ICOs, essentially the equivalent of an IPO in the cryptocurrency world. And Hester Peirce has sometimes questioned whether defendants in those processes understood how their sale of tokens might be deemed a security.
[07:42]
Dave Michaels
She has been more sympathetic to the individuals involved in these deals. She. From what. From what the reporting that we did, she wouldn't get into individual cases with us, but from other sources, you know, they told us she has really questioned whether these individuals who are not these aren't Wall street people. They didn't grow up as regulated stockbrokers. She's questioned whether they really understood how the law or the rules applied to what they were doing. And so I don't know that she's like, she's not. I wouldn't say she's pro ico. I think she wants these deals to be done legally and in a regulated fashion. But she's more tolerant of mistakes that these entrepreneurs make as long as they're not ripping people off.
[08:31]
J.R. Whelan
And so that really does play to the thought that, you know, we've seen a precipitous drop in cryptocurrency values, maybe something like 80% for Bitcoin as to where it was a year ago. But this cryptocurrency entity, this cryptocurrency world is moving forward in some form or another. And like you said, a lot of the people involved here are not career investors. They're not career Wall street people. And maybe someone to hold their hand, to learn the lay of the land is something that they need to move.
[08:58]
Dave Michaels
They definitely need engagement with the regulator, regulatory agencies, because when this industry launched, it didn't have basically ignored how these traditional financial regulations might apply to what they were doing. So they need gatekeepers that they can approach and rely upon. They need regulators who can give them feedback about what they're doing, because some of these projects are extremely complicated and don't sound at all like your traditional stock or bond sale. The question with Commissioner Purse, what is her influence? She's one of five commissioners, and she doesn't set the agenda. She's there fighting, you know, here and there, maybe helping them out at the margins. As long as she's a commissioner, she won't dictate the policy. But, you know, who knows? The two or three years down the line, it sort of depends who's in the White House. You know, she could be in a position of more prominence. You know, the Republicans like her. Who knows? She could be chairman someday. I wouldn't. I wouldn't place any bets on that. It's very hard to predict who becomes chairman in the future, but she has a lot of fans. And you could imagine in the future if there was a vacancy in that office, there probably would be some Republicans pushing to see her put into it.
[10:20]
J.R. Whelan
All right, that is Wall Street Journal reporter Dave Michaels joining us on the line from our Washington bureau. Dave, thanks for being with us.
[10:25]
Dave Michaels
Yeah, thanks for having me on.
[10:27]
J.R. Whelan
And that's your money briefing. I'm J.R. whelan in New York for the Wall Street Journal.
[10:31]
Podcast Host
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen @schwab.com washingtonwise.