A panel of expert witnesses and members of congress discussed the risks and rewards of cryptocurrency in committee Wednesday.

The U.S. House committee on financial services held a hearing Wednesday for legislators and a panel of witnesses to discuss cryptocurrency regulation in the United States.

The subcommittee on oversight and investigations invited expert witnesses to testify before congress on the risks and opportunities of blockchain technology.

Rep. Brad Sherman (D-MN), a ranking member of the House Financial Services Committee, was not keen on the idea of investing in cryptocurrency to save for retirement:

Cryptocurrencies are highly volatile, so if one person makes a million dollars and retires at age 45, and nine lose $100,000 – Coinbase makes money, and one millionaire goes on TV and says how wonderful it is, and nine others do not retire with dignity, but instead become eligible for Medicaid.

He also quipped that the California lottery would make a better “bet” than blockchain: 

Cryptocurrency is something you can bet on, but if people want to have the animal spirits to take risk, I’d prefer they invest in equity markets to support the building of American companies, or the California lottery to support the schools in my state.

But Rep. Tom Emmer (R-MN), another senior member of the committee, was more concerned that regulatory interference was preventing Americans from benefitting fully from crypto entrepreneurship:

Over the last few years I’ve been fortunate to meet with many great crypto and blockchain innovators. A common refrain during our discussion is that they so badly want to develop their crypto and blockchain ideas right here in the United States. But they don’t because of continuing uncertainty with crypto regulation.

Hard-learned lessons from the 2008 financial crisis seemed to loom large over the statements made by witnesses and members of congress. That year’s subprime mortgage crisis in real estate lending quickly spilled over into adjacent financial sectors.

When it did, a wild array of innovative – and unwieldy – new financial instruments wiped out huge swaths of investors and plunged the entire U.S. economy into a recession.

The structural instabilities and excessive euphoria that characterized this period’s runaway growth of new securities derivatives were exacerbated by massive amounts of leverage.

Recent years have seen the rapid proliferation of new ventures and technologies to support and expand the capability, use, exchange, and “hodling” of cryptocurrencies – and the blockchains that maintain them. Some lawmakers and regulators fear it’s like the runup to 2008 all over again.

Efforts to regulate blockchain technology, and mitigate the risks involved when trading them as securities, are a confusing patchwork as lawmakers scramble to understand the new technologies and the industry that’s building them.

Not all federal legislators are wary of crypto. Some even endorse them. In a recent CNBC interview, U.S. Senator Cynthia Lummis (R-WY) said she hopes to see bitcoin as a normal part of a diversified retirement portfolio to hedge against inflation. And earlier this month, the National Republican Congressional Committee began accepting crypto donations for campaign funds.

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