Navigating the regulatory environment and balancing stability and innovation: A conversation with Michael Held, partner at WilmerHale
Crypto & Digital Assets

Navigating the regulatory environment and balancing stability and innovation: A conversation with Michael Held, partner at WilmerHale

Michael Held, partner at WilmerHale and former general counsel at the Federal Reserve Bank of New York, discusses how traditional finance and crypto and fintech leaders can navigate the ever-evolving regulatory environment.
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In this episode of our series, “Crypto leadership & talent: Evolution of control functions,” part of The Heidrick & Struggles Leadership Podcast, Michael Held, a partner at law firm WilmerHale and former general counsel at the Federal Reserve Bank of New York, discusses how both traditional finance leaders and crypto and fintech leaders can navigate the ever-evolving regulatory environment. He shares what his transition from the Federal Reserve Bank of New York to a law firm was like as well as his first exposure to the crypto and digital asset sector, then talks about how, because legal teams need to be constantly learning, he decides what expertise he needs in his team and what expertise he can rely on business partners. Heidrick & Struggles’ David Richardson shares what he is seeing from a client perspective, whether executives, particularly those with policy regulatory backgrounds, are hesitant to move into the crypto and digital asset space now, and what kind of skill sets and capabilities are currently being sought out, specifically in the legal and risk functions in terms of crypto. Finally, Held shares how his clients find that balance between financial and regulatory stability and innovation.

Below is a full transcript of the episode, which has been edited for clarity.

Welcome to The Heidrick & Struggles Leadership Podcast. Heidrick is the premier global provider of senior-level executive search and leadership consulting services. Diversity and inclusion, leading through tumultuous times, and building thriving teams and organizations are among the core issues we talk with leaders about every day, including in our podcasts. Thank you for joining the conversation. 

Victoria Reese: Welcome to the Heidrick & Struggles Leadership podcast. I’m Victoria Reese, partner at Heidrick & Struggles and the global managing partner of the General Counsel Practice and the head of the Corporate Officers Practice. In today's podcast, I'm excited to speak with Michael Held and my colleague David Richardson.

Mike is a partner at WilmerHale, a leading full-service international law firm with lawyers working at the intersection of government, technology, and business. Mike is recognized as a leading authority on corporate governance, having spent 24 years at the Federal Reserve Bank of New York, New York Fed. He joined the New York Fed as a staff attorney and rose to the ranks to become general counsel and executive vice president. He's advised on matters involving access to Fed financial services and master accounts, as well as sanctions arising out of numerous international conflicts. 

David is a partner in Heidrick & Struggles' New York office and a member of the financial services practice. David works with clients at the intersection of technology and financial markets. 

Thank you very much for joining us today. 

Michael Held: Thanks, Victoria. It's great to be here. 

David Richardson: Thank you, Victoria. Great to be back. 

Victoria Reese: Mike, to kick off this conversation, what was the transition like moving from the New York Fed to a law firm? Were there specific leadership capabilities you tapped into more than others as you made this transition? 

Michael Held: Thanks, Victoria for the question. Well, I spent 24 years at the Fed, so leaving the Fed was going to be a big transition for me, no matter what. But, in many respects, I think the qualities that were valued during my time at the New York Fed are serving me well in my new gig. Inclusivity, working as part of a team, recognizing and empowering a diverse array of wicked-smart people to do their best work together. The work is certainly more direct and, in some ways, crisper. Meeting times tend to default to 30 minutes, [unlike] meetings at the Fed, which can be longer, let's say. But overall, I do think the same types of leadership skills that I developed at the Fed are really helpful in my current job.

Victoria Reese: Could you walk us through your first exposure to the crypto and digital asset sector and how your work intersects with it? 

Michael Held: Sure. So, I remember, at the Fed, bitcoin really caught the attention of folks when it had its first really rapid rise up to what, then, seemed like the high water mark of like, $16,000. And I remember the great, raging debate at the Fed among the economist cognoscenti about whether this new thing called bitcoin, this thing that people were calling cryptocurrency was in fact a currency or not. And [they debated] what about it was valuable, what its intrinsic or societal value was. And the debate was really around the bitcoin as a currency or whether it was really the underlying technology, the digital ledger technology, that would ultimately have long-lasting value for society.

Now, in my new job, I think particularly over the last six months, one real area of focus, as we all have seen, has been how both traditional finance—traditional, regulated finance—and crypto and fintech can navigate that regulatory perimeter, which seems to be moving all the time with the latest guidance that's coming out of the regulatory community.

Victoria Reese: David, continuing on this theme a little bit, based on your conversations with executives, particularly those with policy regulatory backgrounds, do you think many are hesitant to move into the crypto digital asset space now? 

David Richardson: Yeah. So actually, a little bit around Mike's comment on timing: it has evolved pretty significantly with time. So, in the past, in 2017, the time period Mike was noting, and then also 2020 through end of 2021, there was a huge amount of interest in the space from executives, but the institutions lacked—in some instances—the structure and the focus, or perhaps even the kind of view of these functions as being critical to business operations. So, what that often resulted in was that executives were very interested in moving into the space, but the roles weren't quite at the level or receiving the kind of attention that would be logical for them to move into from other more mature sectors. Right now, ironically, the legal regulatory compliance expertise is extremely highly sought-after within this ecosystem, but executives are doing more due diligence and are perhaps more hesitant. I think that there are still an enormous amount of really talented people working in these functions in and around the crypto ecosystem, a variety of different players in that space. And from an intellectual and sometimes a philosophical point of view, there are people who are really committed and focused on this space. But certainly if people are operating in a more mature industry—technology, financial services, legal services, professional services—there is more of a pause before engaging in a process like this in the crypto and digital asset space than there was in say, 2020 or 2021.

Victoria Reese: Mike, crypto is very fast moving, especially the regulatory landscape. I'm assuming this requires the legal team needing to be constantly learning. How do you decide what expertise you need to have yourself and in your team versus the expertise you can rely on business partners for? What advice would you give to general counsel?

Michael Held: So, I do think, and I come back to what I talked about earlier, that the key here is that the challenges in this space are really multidisciplinary. So, it's important to think of this not just as, from my world, say, a bank regulatory issue or a market SEC issue. It's really about, again, assembling a team of folks who are all deep experts in their fields and bringing them together to advise on the broad array of challenges that our clients are grappling with, both in terms of firms outside the regulatory perimeter, in the crypto space, as well as regulated institutions that are trying to figure out how to take advantage of opportunities in the space. 

I do agree, certainly, with David that there is a, perhaps a bit more caution, understandably, in traditional finance now. And I think that, on the other side, in the crypto space, they are really trying to figure out how to engage with traditionally regulated institutions in a way that meets their due diligence requirements and the expectations that are being put on them by their regulators. And that does require a different set of skills perhaps than they had focused on earlier—skills that are expertise in real risk management and thinking about the three lines of defense and what a true compliance program looks like. I think that those are areas that maybe, in the crypto space, there hadn't quite been as much focus, with respect to some institutions, than clearly there needs to be now if they hope to partner with institutions in traditional finance.

Victoria Reese: David, you meet regularly with CEOs from board members currently in crypto looking to hire talent into their organization. From what you are hearing, what kind of skill sets and capabilities are currently being sought out specifically in the legal and risk functions? 

David Richardson: I think that crypto and digital assets is actually similar to trends that you see in other growth industry sectors right now, but it's a little more extreme. So before last year, CEOs and board members were really focused on growth initiatives. And so, from an executive talent point of view, that meant that we were having conversations around executives who could launch new businesses, new products, open up new regions, who much more growth focused. Now, everybody is focused on operational discipline and the legal function is a critical part of that. It is perhaps the most critical within this ecosystem, given everything that's going on in the macro environment. 

As Mike was saying, it is a multidisciplinary team, and I think that, now, more sophisticated and mature clients really recognize that, that you're not hiring in an executive and then leaving them to it. You’re thinking three lines of defense, you are thinking how organizations should be designed to be future-proofed, [thinking about] areas like compliance, legal, risk, and other functions and areas that are really focusing on operational discipline. 

Mike, I'd be interested actually, as you work with clients on how they find that balance, trying to figure out how they find the balance between financial and regulatory stability, but also innovation, how do you see clients doing that successfully? 

Michael Held: Thanks, David. That is a great question and one that's frankly near and dear to my heart. This is an area in the in-house legal space in the general counsel space—these are not new issues for general counsels to grapple with. I think about the model that the legendary general counsel from General Electric, Ben Heineman, has developed an espoused for a long time now wherein GCs and in-house legal departments have to be partners with their business clients as well as guardians of the organization, the partner–guardian model. And it really is about how to effectively balance innovation and opportunities with effective risk management. And it's a job that general councils have had to do for, you know, the last 50 years.

So, this isn't a new issue, in some respects. I think what is new is the pace at which that balance is changing. Even in just the last six months, the focus on risk management versus innovation and opportunity. And it's also, frankly, having just come from the regulatory community relatively recently, it's a similar type of issue that the regulators have been grappling with. How do you promote effective risk management without snuffing out innovation? And I do think that, in the start-up world—so this isn't just idiosyncratic to crypto, but for newer firms—typically the balance is weighted toward opportunity and innovation and there's less focus on that effective risk management. And I think what we're seeing now is that they have to shift that balance relatively quickly and relatively earlier than, say, other types of start-ups would have to focus on that three lines of defense and risk management side of the equation. And so, I'm in complete agreement with you, David, that they need to really think about how to build, at the outset, effective compliance programs, how to cultivate a culture of compliance and effective risk management that's scalable over time as their businesses grow. I'm not saying that they have to build a full-bore compliance program like you would see at a G-SIB [global systemically important bank], but they do have to be thinking about that early on and plant the seeds and have the initial frameworks so that it is scalable over time to meet the expectations of their partners in traditional finance as well as the regulatory community.

Victoria Reese: Mike, are there newer questions, concerns you've been hearing from clients related to the talent within their organization and their ability to manage this new landscape?

Michael Held: Yeah, and it goes right to what we were just talking about. One thing that I've noted, again, I came from a legal department at the New York Fed, where the turnover rate was exceedingly low, and that creates its own challenges. I like to think it was because they had such a great leader at the top, but maybe it was other things... 

Victoria Reese: They did! They did for sure.

Michael Held: But people just didn't leave. That presented not only challenges, it also made for a fantastic, deep legal department with real knowledge of the history of the place and the culture, and [people who] knew how to walk that line between business partner and guardian.

One thing I've seen that I found rather remarkable in the crypto space is the pace at which people move from organization to organization. And that presents its own set of challenges and I think one challenge, particularly, with respect to cultivating this culture of compliance and risk management that I think we've been talking about, and the three lines of defense, is that there's a real risk of losing momentum quite quickly when there's so much turnover. So, I do think that what we're hearing is that some of these firms are thinking about how to promote a little bit more stability in their organizations so that they have folks who are committed to this for a longer term that they can really invest in and that they're not going to lose immediately after they feel like people are really getting up and running in the organization. And I do think it is a bit of a challenge, particularly now in the crypto space, where there is so much flux in that space. 

Victoria Reese: Mike, how do you think this industry and the critical control functions will develop over the coming months and years? I know that's a big question, to ask you to look into the future.

Michael Held: So, the traditional thing that we've seen from fintechs that would come in—and I'm using fintechs on purpose; it predates crypto—they would come in for a meet and greet with me or others at the New York Fed. And it was really just to get a sense of who we were. But the approach that many of the fintechs were taking was that they were going disintermediate traditional finance and possibly even—we see this with crypto—the dollar and central banks. And that shifted over time as they realized, no, traditional finance actually is a vital part of their ecosystem. It's often their on-ramp into the crypto space. And so, now they are starting to think ahead and think that they really will need to make investments in what we've been talking about in this risk management space in order to meet the expectations of traditional finance and the regulators, if they have any hope of surviving. And they have to look at what the regulators are focused on for their regulated institutions because that is going to cascade out to them. And so, as they think about this over the long time, they really do have to shift that balance a little bit from “move fast and break things” to thinking about how to build a stable, enduring, well-controlled organization that will last over the long term. And this is not that they weren't focused on that before, but really, you know, dollars or cryptocurrencies are, in some ways, always limited about where you focus your time and attention. And I do think that they will be thinking about focusing more of their time and attention and resources on building those effective three lines of defense and risk management models.

Victoria Reese: Mike, looking back on how much change has taken place even in just the past year, when you speak with leaders in the crypto space, what are the common themes you've been hearing in terms of what they wish they had known before entering the space? 

Michael Held: I do think, particularly now that a number of folks in the crypto space are going through a little bit of the five stages of grief—which I often find is a helpful philosophical framework for much in life. But, in this space, given the collapses we saw over the course of the last half of the year, last year and running into this year, there is a fair amount of frustration that their long-term aspirations are going to perhaps have to be pushed out a little bit or maybe even a lot. And they are really, again, thinking about how to survive in the current environment and be there in place when the opportunities open up again. They are thinking hard about this. There is a fair amount of frustration in this community with the regulatory community. We see the regulators using tools outside of the rulemaking process. You know, folks talk a little bit about using enforcement actions and supervisory guidance, but I do think they are starting to grapple with this question and reaching the acceptance phase that this is going to be how it is for the near and intermediate term, and how they can position themselves to survive and, frankly, reap benefits and opportunities as things open up again. 

Victoria Reese: David, same question over to you. What common themes are you seeing in terms of your clients and what did they wish they had known before entering the space?

David Richardson: Yeah, so the common theme everybody has said for many, many years, when you catch up with someone and they're four weeks, six months, a year into a role moving into this space, regardless of the industry they came from, you would always hear, “I've never worked as hard.” You would always hear, “I've never learned so much.” And you used to hear, “I've never had so much fun.” You don't hear so much about the fun anymore. I think that has largely gone from the market. People have been, as Mike was saying, fighting for their survival. I do think it's an important maturing phase for the industry. And for the executives that are in that industry, and I kind of think about how invaluable, particularly for executives in control functions and board members, these experiences are. It's the same as in any other market—the people working in control functions in banks during the financial crisis. Those years were horrible. Definitely not years that people look back on with fondness, but they became formative. And I think that is the phase that we're at now. It's the 2008–2009 financial crisis; it’s the 2000–2001 dot-com phase. People are going to look back on this without rose-tinted glasses, they’re not going to talk about all the great fun they had. But they're going to say, “That was the kind of building blocks for my career and my future experience as I take it forward.” It just is worth restating that the pace and the work ethic is extraordinary in crypto, and I also think the people who move into this space have an incredible tolerance for ambiguity, just given how fast the industry has been evolving.

Michael Held: David, I just want to pile on there because I completely agree. And I think, you know, one thing I mentioned earlier that the Fed was struggling with back in the mid-200s was, what is the value from this new technology? And I find it really amazing—the commitment and the belief in folks working in the space that this is a technology, this is an opportunity, that will bring incredible value to society over the long term to individuals. It will increase access to the financial system. And it would be easy during this period of time for some folks who aren't believers to give up and walk away. And the frustration that I hear from folks is that they truly believe that this technology will help society over the long term. And they are deeply frustrated that—perhaps because of some folks who weren't quite as careful as they could have been, and perhaps the regulatory community—that contribution to society is going to be pushed out longer. 

David Richardson: Victoria, I'm interested in your perspective. Same question. What do you hear from executives in the space?

Victoria Reese: I think Michael hit a lot of the issues that I would focus on starting with, did these individuals move for the right reasons? Did they do the due diligence on the business model and the leadership? And how does the leadership use and value legal risk and compliance? Also, did they really look inside themselves and were they self-aware about whether they could work with that level of ambiguity? Asking, am I ready to have a steep learning curve in not only a new world, but developing new influencing skills within an evolving space? And then, clearly, they saw the opportunity, but they needed to really understand their appetite for risk. So, I think, again, we will see people, as you and Mike have discussed, who will stay in the space and in the long term, who will see the contribution. There are others that are coming back to say they want to go back into the more traditional institutions where they grew up. They want that structure back. 

David Richardson: I'll actually just follow on there, Victoria, because I think that's a really interesting point. For a long time, and actually Mike talked about this in terms of the Fed debate in 2017 around bitcoin—Is it a currency? Do we care more about the technology? For the longest period of time, for people who were operating in this space, the regulatory regime was up for debate. So there were a lot of theoretical and philosophical discussions around which frameworks these assets and technologies are going to fit into. And everyone would say, “It's going to be great when we have clarity.” Well, now we're barreling towards some level of clarity, and I think for a lot of people it's going to be way more restrictive than they were hoping. And so that's a negative. But the flip side to that is, for the people that are really interested and passionate and have conviction on the space, as Mike was talking about, that clarity is going to create opportunities for businesses and it will also create moats for businesses as the means of engagement become much more clear.

Michael Held: I also think it'll be helpful. Having the influence skills, figuring out how to influence in the space is really critically important. And I do think, for those who have come back, at least some of them—and I've heard this from the folks who have come back—their frustration at not being able to effectively influence on the risk management side was unexpected and not helpful to the organization, and is the reason that they often turn around and come back. I think, now, given that we're seeing some degree of consensus among the regulatory community, and David's point is a good one, folks in the crypto space were hungering for so much more clarity. And there's perhaps a little bit of, be careful what you wish for here, because I don't necessarily think the clarity that they've received so far is really what they were hoping for. But I do think that, for folks who, on the risk management side, want to stay in the space, perhaps they will have a bit more influence than they had before and be able to build something that really durable and longer lasting. And Victoria, as you said, it is a question of what drives you and gets you up in the morning. But folks who are interested in doing that, they may find themselves more influential than they had been previously. 

Victoria Reese: Okay, Mike and David, as we bring this conversation to a close, I wanted to ask one final question. Looking ahead, what specific leadership skill sets and capabilities will be most important for leaders in this space to help their organizations meet their strategic goals?

David Richardson: I'll start with this one. I love getting out my crystal ball because I just know that I'm going to be wrong. So, instead of focusing on the functional skills, I'll talk about what I think is most critical, which I think is the kind of qualities and leadership capabilities that are going to make people successful in this space. Because organizations are going to demand that, regardless of the kind of cycle that we're in. And I think that's pretty straightforward. If executives are coming into this space from an existing company that operates in this space, or from a technology business in unrelated spaces or financial services business, what really matters is one, exceptional communication skills. As Mike was pointing out, that partner–guardian model he highlighted, for people that are coming in, working with founders, working with boards, regulators, investors, customers, clients—you need to be able to bring clarity through communication. That's absolutely critical.

Number two, agility in the leadership style and some level of intellectual dexterity because this industry has been operating, from a regulatory point of view, in a very gray area for a really long time, and things are becoming black and white. As business models change, as approaches change, three lines of defense, as things become more mature, people just need to be very agile and adaptable.

And then, the final thing—Mike also highlighted this—conviction is really, really important. It's tougher, honestly, in control functions because, while on the engineering, the founder, the sales side of the house, people find it more natural to be extremely high conviction and passionate about this industry and other things in their lives, generally speaking, people in control functions are more balanced just in terms of their approach. So it's less likely that you're going to find someone who's just 100% all in on crypto and convinced it's going to take over the world if they've grown up a lawyer. You are sort of trained in critical thinking and you're just a little more skeptical as an individual, typically. But I do think having some level of conviction in the domain is important and/or a tolerance for just really, really hard work. That goes a long way. 

Victoria Reese: Lawyers love to work hard. We know that.  

Michael Held: Absolutely. Everything David said resonates with me. I think, and this is maybe a flavor of what he talked about, but one thing I saw when I would engage with folks in this space at the Fed—and I see it now—is on the communication side, helping to calibrate the expectations of the founders with respect to answers or clarity from the regulatory community. There's often an expectation—for founders, often, a long time is three to six months, and for the regulatory community, that is not a long time. And so, as these institutions continue to engage with the regulatory community or even traditional finance, understanding that it is a different pace at which those sectors move compared to the crypto space or the start-up space more generally is going to be important so that these firms calibrate their business models for long-term success. That involves influencing skills, and communication skills. You don't want to turn off the founders to everything you're saying, so you have to figure out how to get that message across. But I do think it's critically important. I also think that helping the founders understand what the most effective business models will be over the long term is really important. I think one thing that we saw in the space earlier was that many successful business models were dependent on some form of regulatory arbitrage, and I don't think that's going to work going forward. So, really thinking about life as it is, rather than life as you hope it will be in the future or wish it could be, is going to be critically important. 

Victoria Reese: This has been terrific, so thank you both for making the time to speak with us today. 

David Richardson: Thank you so much. 

Michael Held: Thank you. I really enjoyed our conversation.

Thanks for listening to The Heidrick & Struggles Leadership Podcast. To make sure you don't miss more future-shaping ideas and conversations, please subscribe to our channel on the podcast app. And if you're listening via Linked In, Twitter, or YouTube, why not share this with your connections? Until next time. 

About the interviewers

Victoria Reese ( is a partner in Heidrick & Struggles’ New York office and the global managing partner of the Corporate Officers Practice.

David Richardson ( is a partner in Heidrick & Struggles’ New York office and a member of the Financial Services Practice. He leads the global Market Infrastructure & Data Services sector and co-leads the Crypto & Data Assets sector in the Americas.

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