Autor Cointelegraph by Christina Comben

French authorities have recorded 90 cases involving kidnapping, abduction, extortion, threats, and violent theft related to cryptocurrencies in just over seven months.The figures, provided to Cointelegraph by the French Interior Ministry, are from Jan. 1 to mid-August 2026. Authorities also recorded 223 arrests, and 126 people were imprisoned from January to July. The figures equate to a new case every two and a half days, although there is no official year-on-year comparison to understand if the problem has become suddenly worse: “We do not have the statistics on these items for 2025, as the recording of events began on Jan. 1, 2026,” the ministry says. What makes the new numbers even more striking is they are much higher than other public trackers of meatspace attacks. Chainalysis counted 30 publicly known violent crypto incidents in France through mid-2026, but noted that the scale was “almost certainly larger.” Security firm Gart.io has tracked 73 attacks in France in the year to date, which puts France in the number one spot ahead of the USA on 66 real world attacks, and the UK on 27. The rise in physical attacks — known as “wrench attacks” — on crypto holders in France points to something bigger than a rash of isolated incidents. Leaked personal data may be the culprit. So, why France?Wrench attacks are far from a new phenomenon. Bitcoin security advocate Jameson Lopp’s long-running directory of known physical attacks has documented 365 cases across 60 countries between 2014 and 2026, with France topping the leaderboard.Related: Home invasions became most common crypto wrench attack in H1 2026: CertiKWhat seems to be new, however, is the speed at which violent crypto crimes are spreading throughout the country. Attacks have gone beyond Paris to places including Strasbourg, Marseille, Grenoble, Toulouse and Nantes, according to Chainalysis. Violent attacks above the historical baseline. Source: Chainalysis.Criminals aren’t targeting crypto rich tourists, and of the victims with known residency, 93% were French. Chainalysis head researcher Eric Jardine tells Cointelegraph the surge is “very likely” due to a “significant data breach.”“These sort of breaches expose more than financial information; they reveal who holds crypto, where they live, and how to find them.”That makes physical attacks against crypto holders particularly insidious because they can begin long before a thug shows up with a wrench demanding your seed phrase or a crypto transfer. The assailants first need to know who has something worth stealing, where they live and how to reach them.Jardine says the French tax authority compromise in 2024, where a tax official in the Paris area “leaked PII, financial and crypto holding information on French taxpayers,” may have been the accelerant. Chainalysis records show attacks surged from late November of the same year.Chainalysis also points to a further incident in January 2026, with crypto tax reporting firm Waltio disclosing a breach affecting some 50,000 users, creating yet more useful data for attackers to mark their targets.Francis Pouliot, founder of Canadian Bitcoin exchange Bull Bitcoin, has repeatedly challenged Europe’s DAC8 crypto reporting rules in France, which expand tax reporting and information-sharing requirements for crypto users across the European Union. “DAC8 has transformed the concept of Know Your Customer into Kill Your Customer,” he said, along with describing France as the “crypto kidnapping capital of the world.” The world of physical attacks. Source: Gart.ioWhen the target isn’t the BitcoinerAccording to Chainalysis, one of the most revealing changes may be who is being attacked. Globally, relatives and acquaintances accounted for around 25% to 30% of violent crypto incidents by early 2026, and in France, the proportion was more than 40%.In May 2026, six men allegedly tried to abduct the wife of The Sandbox co-founder Sébastien Borget from the couple’s home in Villenoy, France, with one attacker posing as a delivery driver to get her to open the gate.In August, a couple in rural France reportedly endured three separate attempts to break into their home after buying a property previously occupied by crypto millionaires, after the previous owners’ tax information and address were leaked onto the dark web.A similar tactic was used in 2025, when the father of a crypto entrepreneur was abducted in Paris and held for two days, with the kidnappers reportedly cutting off part of his finger and sending it to his son while demanding $5.6 million in cryptocurrency. Jardine says the targeting of relatives and associates “suggests criminals are doing reconnaissance before they act,” whether by “monitoring social media, analyzing blockchain data, using leaked information, or receiving tips from insiders.” That turns the usual idea of a crypto target on its head, since the person with the wallet may not be the person standing in front of the attacker. French authorities are responding by treating the attacks as organized crime, coordinating investigations through JUNALCO, the country’s specialized organized crime jurisdiction.The $5 wrench conundrumMost crypto holders have learned how to protect their seed phrases, set up hardware wallets, test their environments and avoid clicking on phishing links.While those things are still important, none of them will help if a bad actor already knows who they are, where they live and that they have something worth stealing in the first place. Cryptography can protect a wallet, but it can’t stop an attacker with a $5 wrench.Related: Revolut ID thefts highlight KYC’s dangers: Here’s how to fix itCointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Some articles contain affiliate links, from which Cointelegraph may earn a commission. These relationships do not influence which products we review or our editorial conclusions. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.

As the charts flip from red to green, crypto lending has seen a resurgence of interest after a particularly dismal second quarter.Figures from Galaxy show that $11.33 billion left the sector in Q2 — partly due to the crisis of confidence in lenders caused by the Kelp DAO hack in April that left users of the most trusted protocol, Aave, unable to access their ETH.Since the beginning of July, however, total lending value locked has gained more than 55% to sit around $56 billion today.But that also means the honeypot has grown larger. Can users trust interlinked DeFi lending protocols in the age of AI-assisted hacks, when an exploit from any one protocol can have a series of devastating effects for other protocols connected to it?Stani Kulechov, founder and chief executive of Aave Labs, tells Magazine the problem is now top of mind. “When a protocol accepts a token as collateral, it is also accepting that token’s bridge, its verifier configuration, its oracle and its issuer’s operational security.”And that’s exactly what landed Aave in trouble.An expanding attack surfaceWhen hackers exploited a Kelp DAO cross-chain route in April, they created 116,500 unbacked rsETH (worth about $290 million at the time), and many of those tokens were posted as collateral to borrow other assets on Aave markets. Even though Aave’s own contracts were not breached, the protocol still saw deposits fall by around $15 billion in the days after the exploit, and it had to freeze its rsETH and wrsETH markets.The lending market contracted by 16.78% in Q2. Source: GalaxyKulechov says that Aave now takes a more holistic approach to security. “We rebuilt our approach around that wider view,” he says. “Our starting point is that security can’t stop at the smart contract.” He adds that traditional reviews “missed the risk sitting in the bridges, verifier networks and other infrastructure an asset depends on.” Related: MiCA is coming for DeFi vaults, but regulation will be difficultUsers of lending protocols will similarly need to judge how exposed a protocol is to external and internal risks. “Every wrapper, bridge and oracle between the lender and the underlying asset is another place a loan can go wrong,” says Thomas Wu, chief financial officer of Bitcoin-backed lender Ledn.Sid Powell, co-founder and chief executive of crypto credit platform Maple, tells Magazine that “serious lenders” should assume a borrower can fail at any time and work backward from there. “What am I holding, where is it, can I see it in real time, and how quickly can I get to it if something breaks?”When security fails, containment mattersDeFi lender Spark chief executive Sam MacPherson says that beyond smart contracts, the team also reviews governance design, operational security, collateral quality, liquidity management and dependencies across the wider ecosystem. Spark began phasing out rsETH on SparkLend in January, before the April Kelp exploit, after assessing that “its low usage and revenue” did not justify the “additional risk” created by supporting it.Kulechov says Aave has introduced similar mechanisms, and every asset is re-reviewed quarterly and “again after any material change.” He says the protocol has already started  “an orderly wind-down” on six networks that didn’t meet the chain-level standards.Lending (TVL) is up over 55% from the end of Q2. Source: DeFiLlama“No protocol can control the entire ecosystem, but it can control how much of that risk it takes on and how quickly it responds,” Kulechov says.While preventing failures is the aim, protocols also need procedures in place to respond if something happens, says MacPherson.“Preventing losses is only part of the challenge. Protocols also need to demonstrate how a loss would be contained if something does go wrong.”The margin for human errorShawn Owen, founder and chief executive of SALT Lending, says that human error remains one of the biggest vulnerabilities — and it’s the easiest to overlook.“A lot of the biggest losses have come down to key management, access controls or someone getting socially engineered, and a smart contract audit won’t catch any of that,” Owen says.Additional risks materialize when assets are deployed elsewhere to generate interest. Crypto lenders learned that lesson the hard way during 2022’s brutal market unwind, when lenders like Celsius, Voyager and BlockFi all imploded after taking on risks customers either didn’t understand or weren’t expecting. To minimize the attack surface, Ledn keeps client Bitcoin with qualified custodians rather than lending it out to generate additional yield. Related: S&P Global brings risk assessments to growing crypto lending vault sectorWu says every transaction is an additional point where something can go wrong, “so the fewer there are, the lower the risk of a breach.”“The only way to take those risks off the table is to keep client Bitcoin in segregated custody, with tight controls and as few movements as possible.”Powell warns that when deposits start coming in faster than a manager can find good places to lend, the pressure to maintain yields can lead to bad choices. “So they take on a little more risk to get there. Maybe the collateral standards get looser, or they lend to a borrower they’d have turned down a year ago. […] The managers who hold up in a downturn are usually the ones who were willing to say no to capital when they didn’t have a good place to put it.”Can AI make lending safer?For all the recent headlines about AI hacks and exploits and agents escaping human control, AI may actually be able to assist in making crypto lending safer.Aave is already using AI-assisted testing alongside its conventional security processes.  It used mutation testing to deliberately introduce bugs into V4 contracts, and its test suites caught 271 of 304 injected vulnerabilities.In a recent review of its V3 and V4 codebases, three AI security tools generated 71 findings, of which, after manual review, 20 were considered valid. The other 51 showed why human security experts will likely remain employed for some time to come. AI-Assisted Security Review of Aave V3 & V4. Source Aave“AI is very good at breadth and speed,” Kulechov says, “but around 70% of the raw findings were false positives, so expert judgment stays essential.”AI is something of a double-edged sword as its permissions, protocol knowledge and decision-making processes become another potential attack surface.“As AI agents start managing capital onchain,” Kulechov says, “their permissions, inputs and decision logic become things that need to be secured just like a contract.”So, as crypto lending grows again, the challenge isn’t just keeping the code secure, but making sure every new part of the puzzle is understood, monitored and contained when something goes wrong.Magazine: Stablecoins can drain from banks and nations at lightning speedCointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Some articles contain affiliate links, from which Cointelegraph may earn a commission. These relationships do not influence which products we review or our editorial conclusions. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.

After Bitget got hacked on Sept. 24, $387.5 million of stolen funds quickly began moving across chains, with some headed to decentralized cross chain swaps platform THORChain.Chief executive Gracy Chen publicly appealed to the platform to refuse service to attacker-linked addresses. “The industry is watching,” she said.Yet THORChain refused. And that refusal has kicked off a furious debate between those who believe protocols have a moral obligation to block stolen funds, and those hold the cypherpunk ideals of decentralized, permissionless technology sacrosanct. Having previously watched on as the Bybit hackers funneled $1.2 billion through the protocol, it’s pretty clear which side of the argument THORChain is on. Developer Boone Wheeler tells Magazine:“A truly permissionless protocol can do nothing when it encounters known stolen funds — it is blind to their provenance. If THORChain were able to block specific stolen funds, it would not be permissionless.”Where does permissionlessness end? Critics argue that THORChain wasn’t quite so idealistic when validators voted to halt the chain in May after an automated system triggered when an attacker exploited a vulnerability and drained over $10 million from one of its vaults. Bitget CEO argues THORChain should refuse services. Source: Gracy ChenNEAR Intents, which is a cross-chain transaction competitor of THORChain, took the opposite approach and intervened to block hack-linked funds. Its automated security layer SHIELD identified more than $50 million in attempted flows linked to the Bitget incident and stopped $503,000 during execution. It said $166,000 passed through. Related: THORChain under fire over Bitget, ETH evolves beyond blockchain: Hodler’s DigestNEAR also waived its share of Bitget’s recovery bounty. General manager Alex Shevchenko tells Magazine, “NEAR Protocol is permissionless: anyone can build on it, transact on it, and become a validator…“No one needs permission to hold or transfer assets or deploy contracts on NEAR Protocol. However, that does not mean every application built on NEAR must process every request.”NEAR Intents has since come under heavy fire for intervening, with critics arguing it demonstrates it is not permissionless or decentralized. This may expose it to claims it should exercise that control more broadly. However, because SHIELD is an automated system, crypto lawyer Yuriy Brisov believes it could still fall within the protections afforded to decentralized protocols. “There is no compliance team, people who sit there and control the operation manually. This is a smart solution, and that’s what we recommend to all the DeFi companies.”Source: Omid MalekanPermissionless does not necessarily mean neutral Biget’s Chen tells Magazine that while she understands different protocols have “different architectures, governance models and technical capabilities,” there is an important distinction between permissionless infrastructure and “facilitating the movement of known stolen funds.”She points to NEAR Intents’ actions and says, “We appreciate that response and will follow the appropriate legal and recovery process for those assets.”Bitget wants to understand “what is technically and governance-wise possible when stolen assets are identified,” Chen says, and whether the industry can find workable approaches together:“Permissionless infrastructure does not necessarily mean there can be no mechanisms for detecting and responding to known illicit flows.” Complicating THORChain’s argument, it has shown it can intervene in an emergency if it chooses to. THORChain’s post-mortem of the May exploit said the protocol automatically halts activity when its solvency checks detect an insolvency event, and node operators can then use broader emergency controls to pause trading, signing and other network activity. Related: SlowMist traces Bitget hack activity to Aug. 31 zero-day exploitWheeler says there is “firm consensus” among THORChain’s nodes around the ideal of being permissionless, and that “halts are only used when there is an active issue or problem with the protocol.” Moreover, he says there is “no functionality to screen individual addresses or transactions.” This is a design choice, as the system was “intentionally designed to be truly permissionless.”THORChain halted its chain in May over a security incident. Source: THORChainNEAR Intents provides a contrasting modelWhile THORChain is located at the shadowy super-coder end of the spectrum, the NEAR team occupies the middle ground. NEAR has a new ETF from Bitwise and has a different philosophy and approach.Shevchenko says NEAR Intents was designed to enable open participation but has its own financial integrity measures, and SHIELD is built to “automatically apply targeted controls to supported flows.”In this incident, he says SHIELD used public onchain data and signals from an internal anti-money laundering (AML) database and third-party intelligence providers, such as those listed in the NEAR Intents risk and compliance docs. “SHIELD not only protects NEAR Intents but the whole cross-chain ecosystem it serves,” Shevchenko says: “Every major hack drains capital and activity from the onchain economy, so screening for stolen funds and restricting money laundering helps protect the integrity of the wider blockchain economy.”In fact, the AI-based SHIELD identified the suspicious behavior behind Thursday’s $3.8 million Omni deposit/withdrawal interaction exploit, and halted activity. Chen says when stolen funds can be reliably identified, ecosystem participants “should cooperate where technically and legally possible.” That could mean tracing and information sharing, declining transactions, freezing assets where the infrastructure allows it, or “supporting recovery through the appropriate legal and law enforcement processes.”The cost of drawing the line Joël Valenzuela, a libertarian, cypherpunk and head of business and development for Dash, argues that permissionless means exactly that.“Permissionless protocols, quite frankly, should not draw the line anywhere when stolen funds are identified, because being able to do so at all makes them permissioned.”He says that, as “painful” as it is to watch stolen funds freely moved, the ability to step in and prevent this “opens up Pandora’s Box” and “lets all manner of censorship of innocents eventually happen.” Instead, centralized exchanges should harden security protocols, he says: “High-level exchanges custodying billions of dollars need to take their security much more seriously. Ultimately, DEXs are the way forward.”Max Shannon, senior research associate at Bitwise Europe, says that protocols still in their formative years, like THORChain and NEAR, still have to earn trust and that refusing to launder hack proceeds is a “sound stance.” He believes THORChain’s actions will likely result in more money laundering flows shifting from NEAR Intents to THORChain.Valenzuela argues we must hold the line on permissionlessness. Source: Joël Valenzuela“Credible neutrality at all costs,” Shannon says, is a “cypherpunk ideal” that a small faction of crypto users and builders still champion.“They rarely ask why it is valuable, when it is valuable, or what it costs,” he says. “This is the core difference between NEAR Intents and THORChain.”Magazine: Altseason is coming — and traders are more discerning this timeCointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Some articles contain affiliate links, from which Cointelegraph may earn a commission. These relationships do not influence which products we review or our editorial conclusions. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.

Anyone who’s ever sent a bank transfer overseas is familiar with the painful process of waiting for things like working hours, correspondent banks and settlement times. In many cases, it would be faster, cheaper and just more efficient to strap the physical cash to a homing pigeon, or slap it in an envelope and send it via DHL.Stablecoins can move money across borders around the clock, without waiting for the legacy system to fire up its steam engines.They can settle transactions 24/7, cut out layers of intermediaries and give people access to digital dollars without even needing a traditional bank account. So do we even need banks any more? And what are the ramifications of stablecoins offering a faster, cheaper and easier way to move money?The two clocksAnthony Vassallo, director of crypto at Silicon Valley Bank, which failed in March 2023 and now operates as a division of First Citizens Bank, tells Magazine competition from stablecoins will show up across two time frames:“Two clocks matter. One is slow: currency substitution, deposit erosion, and weakening policy transmission building over months or years. One is fast: a depeg, issuer shock, or banking event that can move capital at software speed within hours.”The European Central Bank raised concerns about the impacts, arguing that large amounts of stablecoin reserves held in bank deposits could trigger cascading withdrawals if there were a surge in redemptions.The bank points to a “liquidity mismatch” between digital money and the banking system that supports it, with reserve assets subject to traditional settlement timelines, while stablecoins settle around the clock.Related: MiCA cracks down on USDT in Europe… but no one else caresWe already saw that dynamic in action in March 2023 when USD Coin lost its dollar peg after Circle’s disclosure that $3.3 billion of its reserves were held at the failed Silicon Valley Bank. The incident turned a banking failure into a stablecoin crisis almost overnight, with authorities having to step in to guarantee deposits. Large stablecoin reserves could trigger a bank run. Source: ECBBank runs are pretty extreme cases; the slower clock Vassallo describes has more of a drip-drip effect. It can happen without a crisis, and may be harder to see as it unfolds.Dollarization at a slower pace In July 2026, the Bank for International Settlements looked at stablecoin flows and conventional foreign currency deposits across 130 economies. It found that both tend to grow at times of currency pressure and during banking or sovereign crises, with stablecoin flows appearing less affected by capital controls. So, when people are trying to move out of a deteriorating local currency, stablecoins can provide a dollar-based alternative that’s harder for local governments to contain. A September report from Sphere Labs and SVB describes Argentina, Nigeria and Turkey as markets where stablecoin demand has been closely connected to demand for dollar exposure.In Argentina, for example, it says 94% of crypto bought with pesos was in stablecoins, while in Turkey, around $38 billion worth of lira was swapped for stablecoins over a year.Arnold Lee, chief executive of Sphere Labs, says stablecoin adoption is fundamentally a dollar story driven by demand for dollars from people who face barriers to accessing the traditional banking system. He tells Magazine: “Most of these economies are going to keep moving toward dollars […] What I spend my time on is the manner of it, because a country that manages the shift and one that gets overtaken by it end up in very different places.”When the clock speeds upA separate BIS study published in March found that a rise in demand for dollar stablecoins can spill into traditional currency markets. Markets where stablecoin demand is connected to demand for dollar exposure. Source: Sphere/SVBThe study looked at four major USD-pegged stablecoins across 27 fiat currencies between 2021 and 2025, and found that increased stablecoin demand could put downward pressure on local currencies and make dollars more expensive to obtain through FX swaps, with the effect stronger when financial intermediaries were already under strain. Lee says, “When citizens in high-inflation economies move from local currency into digital dollars, monetary transmission weakens, deposit bases erode, and pressure builds faster than central banks can respond.” Related: Stablecoins not credible for payments at scale, BIS chief saysThe Sphere report describes how, during a January 2025 dispute between the US and Colombia, Colombians plowed funds into digital dollars. Banks and currency exchanges were closed for the weekend, but the casa de blockchain is always open.That’s where the ECB’s warning shot reverberates the loudest.Under current Markets in Crypto Assets (MiCA) rules, stablecoin issuers must hold at least 30% of reserves in bank deposits, and up to 60% for significant asset-referenced tokens (ARTs).Lessons for the rise of stablecoins. Source: BISThe European System of Central Banks proposed moving away from those fixed percentages earlier this month, toward requirements based on how quickly reserve assets can be made available.That would avoid a doomsday scenario where heavy redemptions bleed commercial lenders dry overnight; something Tether chief executive Paolo Ardoino warned about in 2024, when he called MiCA “very dangerous when it comes to stablecoins.”So the same system can create pressure in both directions: money can leave a bank and move into stablecoins when users want digital dollars, then flow back through banks when those stablecoins are redeemed. The technology doesn’t determine which direction the flow takes, but it can determine how quickly it can happen.So what actually gets displaced?However, stablecoins are not taking over the world just yet. Often they are simply an intermediate currency that moves faster, but still ends up as dollars in the bank.Pankaj Bengani, former executive at Block and co-founder of stablecoin payments company MELD, tells Cointelegraph that close to half of the company’s B2B stablecoin offramp volume is in North America. He says the businesses using it include importers, exporters, technology firms, e-commerce marketplaces, payment companies and fintechs.“The vast majority of corporates in our data convert back to fiat immediately after the transaction settles. They are not taking a crypto position. They are using MELD as a settlement rail instead of SWIFT,” Bengani says.He says the biggest flows are cross-border commercial payments, particularly where businesses earn or hold dollars but suppliers and employees need local currency.Supplier payments make up close to a third of business use, while invoice settlement accounts for roughly a quarter.That paints a different picture from people turning to digital dollars to protect their savings from inflation or yanking lump sums out of the fiat system in times of stress.And it raises another interesting question: if the money isn’t staying in crypto, what part of the traditional system is actually being displaced? Bengani says:“Stablecoins won’t replace SWIFT overnight. The realistic change is a thinner correspondent layer, with a common settlement rail replacing intermediary steps that exist only because banks historically needed each other to cross borders.”In a world where money moves at the speed of thought, that doesn’t mean banks disappear.Bengani says reserves still sit in bank deposits and Treasuries, businesses still need fiat currencies, and banks remain important for “custody, compliance, liquidity, and local settlement.”But what changes is the plumbing in between — stablecoins may not be removing banks from the financial system as much as changing where the friction sits.Magazine: Exchanges reporting crypto gains to IRS becomes tax nightmareCointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Some articles contain affiliate links, from which Cointelegraph may earn a commission. These relationships do not influence which products we review or our editorial conclusions. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.

Altseason may not be officially here, but traders are starting their rotations — and the numbers are getting harder to ignore.Over the past 30 days, memecoin launchpad PONS soared more than 350% in price, while in DeFi, Uniswap’s UNI gained more than 110%, Arbitrum’s ARB jumped over 150% and AI-focused NEAR also shot up around 180%.Privacy token Zcash hit a record high above $1,600 last week, while Bitcoin Layer-2 token LIT and memecoin launchpad token PUMP are also among the biggest gainers over the period, according to CoinMarketCap.Spanning very different sectors, those gains don’t point to one obvious trade, but they do suggest many traders are looking at coins with a good business case behind them this time around.Looking at the massive gains in tokens such as ARB, UNI, Jupiter’s JUP and Ondo’s ONDO, Bankless podcast host David Hoffman said Friday that what they had in common is, “They make money, they all print revenue,” suggesting that this rally could be driven by utility rather than speculation. Among the top 20 biggest gainers last week, there were only two memecoins. In the past week, only Pudgy Penguins made the list. But it’s not all about fundamentals according to 1inch co-founder Sergej Kunz, who notes that over the last 30 days, memecoins have shown the strongest growth among buyers. But he says DeFi protocols, privacy tokens, AI projects and tokenized assets are also attracting attention.Related: The 100x obsession: Fundamentals grow in importance as crypto matures“The pattern so far is breadth before depth,” he tells Magazine, with more wallets buying a broader range of tokens, but generally in smaller amounts.“The caution in the data fits the broader pattern of selective participation,” he says. Users are participating “selectively rather than going all-in.”So what will make this altseason different?Is the market finally getting more discerning and allocating into assets with actual utility as Hoffman suggests, or will it once again end up driven by memecoins featuring dogs in hats and sexual innuendos?It’s too early to say, with CoinMarketCap’s official Index yet to break into Altcoin Season. It’s currently sitting at 64 out of 100, up from 48 last week but still a little way below the 75 threshold that marks an official new season.A small number of coins account for most of the market. Trading firm Talos data shows the top 10 altcoins currently account for roughly 80% of total altcoin market capitalization, up from around 70% at the end of 2024. Hoffman says this rally is being driven by revenue-generating protocols. Source: Bankless.Samar Sen, head of international markets at Talos, says the data is “pointing to a market where capital is clustering around a smaller number of assets rather than rotating broadly into the long tail.”He says Talos’ September flow data also shows a “notably strong buying tilt,” with buying dominating on almost every day. That contrasts with late 2024, he says, when buyers and sellers were more evenly matched, and the post-election rally produced broader outperformance across tokens including DOGE, ADA and HBAR.What people are actually buyingAccording to Sen, the strongest performance is around specific themes, like revenue-generating protocols, onchain perpetuals and DeFi projects, including HYPE, LIT, UNI and MORPHO. Privacy-related assets such as ZEC, NEAR and XMR are also performing strongly, alongside AI-adjacent tokens including VVV and TAO.Related: Crypto’s next altseason may have fewer winners: WintermuteTalos is also seeing a flurry of activity around memecoin launchpads, including PUMP and PONS, and the Robinhood ecosystem and USELESS memecoin are performing well.PONS is the biggest gainer in the last 30 days. Source: CoinMarketCapLike Kunz, Sen says the market is becoming “much more selective.” “Investors are concentrating around specific narratives and ecosystems rather than treating altcoins as a single broad trade.”Tokenized gold and tokenized stocks are also seeing more buyers, and AI tokens are up as well, “albeit from a small base.”Overall however, it may be less of a wholesale shift from speculation to utility and more of a jumble of competing narratives.And with the explosion of unconventional trading pairs on Robinhood earlier this month, we caught a glimpse of how the categories are beginning to overlap. Tokenized stocks are suddenly being traded against memecoins via market pairings like BONER/HIMS and SPACEHOOD/SPCX.One such pairing generated more than $425 million in 24-hour trading volume in early September.The case for a more fundamental altseasonMichael Egorov, founder of Curve Finance and Yield Basis, says he’s seeing more attention around actual use cases and institutional demand than in previous cycles.“All in all, I’d say there’s now more interest in protocols that actually do something useful, can connect crypto with real financial activity, and prove it in action,” he says.Stablecoins are one example, he says, particularly their use in onchain foreign exchange and fintech applications. He believes the “biggest driver” will be the growing integration of crypto infrastructure with the real economy.If that demand keeps growing, it could give this altseason a new source of buying, as crypto infrastructure becomes more useful outside of crypto trading itself — but that’s a big if.Who is actually driving the rally?Talos data shows dealer participation in altcoin trading has fallen from around 65% at the end of 2024 to about 32% in September, even while flows maintained a strong buying trend.“That is a significant difference from the last altcoin rally,” Sen says, “and suggests liquidity providers and market makers have so far played a smaller role in the current move.” He says that, at the same time, access has become easier, and exposure that once required traders to interact directly with decentralized venues like Raydium or Orca is now available through mainstream platforms. That “lowers barriers to entry and broadens retail participation,” he says.Professional traders also have more tools for following the money this cycle, from wallet tracking to copy trading that can provide signals about where capital is moving across wallets, protocols and chains.According to Sen, that creates a combination of broader retail access alongside more sophisticated ways for professional traders to identify where activity is building. Magazine: Exchanges reporting crypto gains to IRS becomes tax nightmareCointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Some articles contain affiliate links, from which Cointelegraph may earn a commission. These relationships do not influence which products we review or our editorial conclusions. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.