Can’t the crypto crowd see the scars from 2017?

Yet his angry tweet storm against the U.S. Securities and Exchange Commission on Sept. 8, after its behind-the-scenes threat to sue Coinbase if it launched an interest-earning product called Lend, makes clear that crypto’s trajectory isn’t going to be so straightforward.

The journey looks more circular than linear, with regulators determined not to let lessons from the last boom-and-bust in 2017 go forgotten, even as crypto advocates downplay the risks. Given this back-and-forth is here to stay, the industry does itself no favors by accusing watchdogs of stifling innovation and over-coddling consumers; if anything, SEC chair Gary Gensler’s team will only crack the whip more enthusiastically.

We’ve been here before. Armstrong’s anger at the SEC’s “sketchy” judgment call that Lend would need to comply with securities rules — likely making it less profitable for Coinbase — has echoes of the last crypto boom, which saw hundreds of token sales raise $20 billion in two years.

Back then, many crypto entrepreneurs were convinced their tokens didn’t meet the definition of a security, and warned that regulating them as such would stifle innovation even as scams were happening under their noses. The taming of this “Wild West” happened relatively late. By the time the SEC’s boss said almost every Initial Coin Offering out there looked like an unregistered security, the price bust had already begun.

While the market implosion of 2017-2018 left little impact on the broader financial system, regulators are still mopping up the mess today: On Wednesday, the SEC filed a complaint against an $18 million ICO from 2017 that it said was in fact an unregistered securities offering.

The lesson haunting regulators is that falling asleep at the wheel before the next crypto-market slump could leave far bigger scars than in 2017.

Booming crypto prices have propelled the market’s size to $2 trillion and fueled all sorts of speculative investments, such as automated “ DeFi” markets offering double-digit returns on locked-up token pools or cartoon blockchain collectibles vulnerable to manipulation. There’s more oversight than there used to be, but there are also more risks: Counterparty risk and financial crime are among those listed in a Wharton School-WEF report on DeFi, which according to Ciphertrace saw $361 million of hacks this year. Elizabeth Warren has called crypto a shadow banking system.

The lesson for the industry should be humility. Coinbase’s plan may have nothing to do with ICOs, but for Armstrong to publicly howl over a planned crypto lending application, which experts say looks very much like a coupon-paying bond or dividend-paying stock (i.e., a security), is pretty tone-deaf. (My colleague Matt Levine suggests Lend looks more like a bank account, which raises even bigger questions.)

Coinbase is a publicly-listed, U.S.-headquartered exchange; it’s not sketchy for it to be in the crosshairs over products linked to volatile asset prices. And volatile it is: This week Bitcoin fell as much as 17% in one day, after a troubled rollout as legal tender in El Salvador.

The challenge going forward is whether regulators can avoid playing catch-up in an industry where technology tends to outpace oversight.

The European Union, fresh from having brought crypto exchanges into the scope of anti-money-laundering rules, is building a comprehensive set of regulations that would supervise stablecoins (tokens whose price is typically pegged to a currency or algorithmically stabilized) and require trading platforms to become subject to capital requirements. But Hubert de Vauplane, a partner at the law firm Kramer Levin, worries the EU’s rules will prove behind the curve when they’re finally launched.

More promising is the recent global clampdown on crypto exchange Binance, hit with regulatory warnings from Canada to Japan, which shows a worldwide willingness to take on business models that appear to skirt the law.

Carol Van Cleef, a lawyer well-versed in digital assets, likes to say that the SEC operates not in days or weeks, but months and even years. With the regulator calling for yet more resources to rein in crypto’s bad actors, the vision of a crypto economy with Coinbase at its center looks a little further away.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering the European Union and France. He worked previously at Reuters and Forbes.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.