Brian Brooks, the former Coinbase executive who helmed the Office of the Comptroller of the Currency (OCC) under U.S. President Donald Trump, will become CEO of Binance.US. 

After stepping down from the public sector on Jan. 14, 2021, crypto observers have been watching closely for where Brooks would land. In March, he joined the board of data-sharing startup Spring Labs. The Binance.US move is clearly far more significant.

Current Binance.US CEO Catherine Coley will depart the company by the beginning of May, Brooks confirmed in a CoinDesk TV appearance on Tuesday. 

“Not because she hasn’t done a terrific job,” Brooks said. “Generally speaking, you want to keep these things small and nimble.”

Under Brooks, the OCC published a number of interpretative letters on how national banks can interact with the cryptocurrency space, with particular attention paid to stablecoins and their issuers. Should banks take full advantage of these interpretative letters, they’ll be able to conduct payments using stablecoins, provide custody services for cryptocurrencies and partner with or acquire crypto custody providers. The Wall Street Journal first reported the news of Brooks’ hiring.

He also oversaw the conditional approval of the first federal bank charter to go to a crypto-native company, when Anchorage was granted a trust charter by the federal regulator.

“This is the company that’s most likely to give the biggest incumbent Coinbase a run for its money,” Brooks said on CoinDesk TV. “It’s the best opportunity to build a fully compliant, but product-diversified crypto platform in the U.S., and it’s a company that has been, you know, revenue and profit positive since day one because of the resourcing [it] had got at the inception.”

Binance, which “licenses its matching engine and wallet technologies to Binance.US,” according to a Tuesday press release, welcomed the move.

“Brian is an esteemed leader with an unparalleled blend of experience across traditional financial services, government, and the digital assets industry,” Binance founder Changpeng “CZ” Zhao said in a statement. “His knowledge and expertise will be invaluable as Binance.US continues to expand.”

Departing exec

Soon-to-be-former CEO Coley did not respond to a request for comment by press time. Brooks confirmed her departure from the exchange and its managing board however.

Before Binance.US, Coley was head of XRP (+1.8%) Institutional Liquidity at Ripple, which she joined after working for Morgan Stanley Foreign Exchange desks in Hong Kong and London. 

“The other thing you’ll see over time is we will quickly migrate into more value-add services and be a more diversified platform not just crypto-asset trading but of other kinds of services based on our ability to access licenses and to achieve compliance very quickly,” Brooks said. 

Though he did not specifically reference it, Binance (the international one, not the U.S. version) recently listed tokens representing fractions of real-life stocks, including Tesla and Coinbase. These tokens allow holders to earn dividend rewards, backed by the actual stock which Binance said was managed by a German investment firm.

UPDATE (April 20, 2021, 14:30 UTC): Adds comments made by Brian Brooks on CoinDesk TV.

UPDATE (April 20, 2021, 12:40 UTC): Adds comments and confirmation from a Binance.US spokesperson, as well as additional context.

Coinbase, the cryptocurrency exchange listed on the Nasdaq, has agreed to acquire Zabo, a startup that lets financial companies give their customers a bird’s-eye view of their crypto investments.

Zabo, whose co-founders work out of the Dallas-Ft. Worth area, announced the deal in a blog post Wednesday. It did not disclose the terms of the deal, except to emphasize that it was a proper acquisition, not an “acqui-hire,” meaning Coinbase is buying Zabo for its offerings, not just the people. The transaction should close in the coming weeks, said Alex Treece, one of the co-founders.

“We’ve been lucky to know multiple folks on the Coinbase team for years,” said Christopher Brown, the other co-founder. “We saw that there were amazing opportunities to work together, which led to us officially joining forces.” He would not elaborate on the companies’ future plans.

Zabo’s service is similar to those offered in the traditional financial services industry by vendors like Plaid and Yodlee, except instead of bank or brokerage accounts it connects crypto wallets.

Coinbase has acquired, agreed to acquire or entered talks with a number of companies in the crypto space before and after going public in April, including trade execution startup Routefire, asset manager Osprey Funds, prime brokerage Tagomi and data provider Skew.

Digital Currency Group, the parent company of CoinDesk, is an investor in Zabo and Coinbase.

With bitcoin (BTC, +2.95%) prices stuck in a months-long holding pattern, some cryptocurrency traders are speculating on what might be the next hot market bet: digital assets associated with visions of a decentralized Internet, referred to colloquially as Web 3.0 tokens.   

Data tracked by Messari and published by Arca Chief Investment Officer Jeff Dorman shows the cryptocurrency sub-sector of “Web 3.0 tokens” gained 22% in the week ended Aug. 1, outshining bitcoin and every other sub-sector, including non-fungible tokens (NFTs). Bitcoin, the largest cryptocurrency by market value, rallied 10%. 

On a year-to-date basis, tokens associated with decentralized Internet applications have seen an average 244% rise, trailing the NFT sub-sector’s 2,726% gain but beating bitcoin’s 37% appreciation. 

Some of the most prominent Web 3.0 coins, such as livepeer (LPT), helium (HNT), and bittorrent (BTT, +13.91%) (BTT), are up at least 800% this year, despite a slump in cryptocurrency markets since April, according to Messari. 

“Seeing the Web 3.0 ecosystem grow exponentially since the beginning of the year and keep the majority of their gains after the capitulation even in May is very positive for the crypto market,” Nick Mancini, a research analyst for Trade The Chain, told CoinDesk. “Higher prices are directly linked to increased demand and expansion of services in each layer, and because of this, the ecosystem is able to continue its growth.”

Web 3.0 refers to a paradigm shift for the Internet run by network participants worldwide and defined by a set of open, trust-minimized and decentralized networks and protocols offering services such as computing, storage, bandwidth, finance and identity. 

For instance, the Ethereum-based Livepeer protocol offers a marketplace for video infrastructure providers and streaming applications, while Filecoin and The Graph provide decentralized file storage and data management networks. Helium uses blockchains and tokens to incentivize consumers and small businesses to provide and validate wireless coverage and transfer device data over the network.

Messari’s tracker shows the Web 3.0 tokens sub-sector, which includes over 40 coins, has a total market valuation of $25 billion, excluding oracle provider Chainlink. (The oracle provider is widely associated with decentralized finance and has a market cap of $10 billion). 

However, just considering prominent projects like The Graph, Filecoin, Helium and Livepeer, the market capitalization of Web 3.0 tokens tallies less than $15 billion. That’s just 2% of bitcoin’s total market capitalization of $735 billion. But it’s similar to the size of the decentralized finance (DeFi) space a year ago. Messari data shows the DeFi subsector now includes 137 assets and is worth over $50 billion. 

Awaiting Mainstream Attention

While the Web 3.0 tokens have outperformed bitcoin and other major coins by a big margin this year, the sector is yet to witness the euphoria or mainstream attention that Bitcoin, Ethereum, DeFi, NFT, and even Ethereum layer 2 projects have received since October 2020.

That’s probably because the underlying technology is relatively complex. 

“Web 3 is not quite as easy as DeFi is to understand, and it’s probably 12 months behind DeFi in terms of mainstream awareness,” Kyle Samani, co-founder and managing partner at Multicoin Capital, said. “We expect this to change as consumer-facing applications based on NFTs, social tokens and creator monetization grow over the next 12 months such as Audius, Mirror, and many others.” 

The DeFi boom began a year ago and has remained intact to date. That sector’s market cap has grown from roughly $5 billion in early 2020 to over $50 billion at press time. 

Samani is confident that Web 3.0 tokens will play catch up as DeFi sometimes gets a bad rep; however, there is no negativity associated yet with the idea of a decentralized internet. Recently, Commodity Futures Trading Commission (CFTC) Commissioner Dan Berkovitz said that DeFi derivatives might be illegal in the U.S. 

“No one really says that The Graph, an indexing protocol for querying networks like Ethereum and Solana and IPFS, is bad, whereas a lot of people in the existing financial system say that DeFi is bad,” Samani said. “So as the awareness of Web 3 grows, it’s hard to see anything but general support and enthusiasm.”

Institutions Chip In

While mainstream adoption is still at least a year away, deep-pocketed investors are pouring money into Web 3.0 tokens. Multicoin Capital is invested in The Graph, Helium, and Livepeer, according to the official website. 

Grayscale, the world’s largest digital assets manager and preferred venue for institutional investors to gain exposure to digital assets, launched a livepeer trust in March. Rayhaneh Sharif-Askary, director of investor relations at Grayscale Investments, told CoinDesk last month that investors are diversifying into Web 3.0 tokens. 

“It’s diversification within the asset class, whether investors want exposure to bitcoin as a store of value, Ethereum for smart contracts,” Sharif-Askary said.

“And then the other applications beyond that are building upon those networks, and solving other real-world problems,” she said, adding that Grayscale’s Livepeer trust is structurally identical to the landmark Grayscale Bitcoin Trust (GBTC) (Grayscale is a unit of Digital Currency Group, an investment holding company that is also the parent of CoinDesk.) 

Livepeer’s LPT token is up 1,050% this year. The protocol’s weekly revenue surged 10-fold to over $10,000 in the February-to-June period, according to data provided by Web3Index. 

Doug Petkanics, CEO and co-founder at Livepeer, told CoinDesk that online streaming is a $70 billion market and accounts for 80% of the Internet traffic today. Further, the market is set to grow from $70 billion to $250 billion in the next five years, according to analysts’ projections, Petkanics said. The prospects for The Graph, and Ocean Protocol are also looking bright, as Messari’s second quarter review said. 

Aside from the strong use case, many of these Web 3.0 tokens offer attractive yields via Staked, a platform that allows investors to earn yield from staking and DeFi without taking custody of their crypto assets. 

For instance, Helium’s HNT token currently offers an annualized 8.7% nominal yield, while The Graph’s GRT (+3.55%) offers a 15% yield and LPT offers 30% returns. The high returns led to positive sentiment for these tokens, as reflected in the below sentiment chart.

“Traders have been feeling bullish in regard to them, which fuels a network effect,” Mancini said. “Traders profit and stake, and, in turn, tell others about the outsized opportunity.”

Crypto Market Is Much More Than Bitcoin

The days of investors considering crypto markets synonymous with bitcoin are passé. While bitcoin remains the top cryptocurrency by market value, the recent underperformance relative to other coins suggests investors are diving deeper into digital-asset markets to find investments with faster growth potential.  

“One-week data may not mean much, but if we look over three months, six months, and 12 months, there’s a clear shift away from bitcoin into other sub-sectors, Web 3.0 being one of them,” Arca’s Jeff Dorman said in a Telegram call. 

Per Arca’s research note published earlier this week, bitcoin has had “both poor up-capture and poor down-capture” this year. In plain English, bitcoin struggled to outperform other major coins during the market-wide downturn observed after mid-April but also underwhelmed as the market recovered in the past couple of weeks. 

According to Dorman, the data shows that some new investors are bypassing bitcoin and ether (ETH, +7.94%) and going directly into other industry sub-sectors. Historically, investors have used the top two coins as gateways. 

TrustToken, operator of decentralized finance (DeFi) lending protocol TrueFi and stablecoin TUSD, has raised $12.5 million in a new funding round.

Blocktower Capital, Andreessen Horowitz (a16z) and Alameda Research led the round by purchasing TRU, TrueFi’s native token, according to a company statement. TrustToken said it would use the proceeds to expand its team and TrueFi’s operations 

“We’re looking to use this funding both to help us scale the protocol, size of that existing market, but also help us to branch into new markets,” TrustToken’s co-founder and CEO, Rafael Cosman, told CoinDesk. 

The round shows investors’ growing interest in DeFi, but while most of the loans in this market are secured with cryptocurrency pledged by borrowers, TrueFi lending does not require collateral.  

In lieu of pledged assets, TrueFi bases lending decisions on credit scores derived from on-chain and off-chain data. Since November 2020, the protocol has originated over $200 million in loans and paid out $1.7 million to lenders, without any defaults, according to the company. 

With most DeFi protocols focusing on overcollateralized lending, “it’s never going to be able to grow to the scale where it can actually take a significant bite out of traditional financing. So a key part of this is actually being able to bring more off-chain data on-chain,” Cosman said.

The round also comes as crypto lending, decentralized and otherwise, is very much on regulators’ radar. In recent weeks, centralized platform BlockFi, which offers interest-bearing accounts collateralized by cryptocurrencies, has drawn the ire of five state regulators.

Celsius, which raised about $20 million last year, has long claimed to demand collateral, though it may quietly have made a few uncollateralized loans.

TrueFi’s on-chain credit scores will be beneficial “for lenders to assess where they want to put their capital,” said Blake Richardson, an investor at BlockTower.

Bitcoin bounced back toward $39,000 on Wednesday as buyers responded to short-term oversold conditions. The cryptocurrency is up about 4% over the past 24 hours, compared with a 9% rise in ether during the same period.

“If BTC holds above $40K for a week, the probability of a breakout would increase,” Pankaj Balani, CEO of Delta Exchange, wrote in an email to CoinDesk. “We believe, on a conclusive breakout of $40K level, BTC could challenge the $48K level. On the downside, traders will keenly monitor the $36K level.”

Latest prices

Cryptocurrencies:

• Bitcoin (BTC) $39845.8, +4.44%
• Ether (ETH) $2699.8, +8.6%

Traditional markets:

• S&P 500: 4402.7, -0.46%
• Gold: $1814.2, +0.21%
• 10-year Treasury yield closed at 1.16%, compared with 1.181% on Tuesday.

A bitcoin breakout could encourage ether buying, as well. If support holds, ether could rally further and test the $3,000 mark, according to Balani.

“ETH can outperform BTC in the medium- to long-term, but for the next few quarters, ETH should continue to exhibit strong correlation with BTC,” Balani wrote.

Some analysts, however, expect the recent bitcoin bounce to fade.

“Today’s near-term recovery snapping a four-day losing streak can be interpreted as just a rebound with resistance around $42K to $45K,” DailyFX analyst Michael Boutros wrote.

Additionally, a rebound in the U.S. dollar could limit bitcoin’s advance in the near-term, according to Boutros.

Bitcoin active supply

Roughly 33% of the total bitcoin supply was moved on the blockchain over the past six months, according to data from Glassnode. The chart below shows the percent of active bitcoin supply, which could be a potential indicator of holders’ mentality. 

Bitcoin active supply is the number of coins transacted at least once over a given period of time. The supply metric declined from a recent peak in April, which coincided with a top in bitcoin’s price of around $63,000. Lower active supply suggests investors are holding their coins, which further reduces the total supply available to be sold.

Declining correlations

Bitcoin’s 90-day correlation with gold turned negative for the first time since November 2017. The cryptocurrency is up about 34% year to date, compared with a 4% loss in gold during the same period. The negative correlation underscores the potential diversification benefits of holding bitcoin in a multi-asset portfolio, albeit with greater volatility. 

Stocks have also decoupled from bitcoin over the past year. The S&P 500 is less correlated with bitcoin since the March 2020 pandemic shock caused a sell-off across “risk” assets, including cryptocurrencies.

AAVE and UNI's decline in exchange reserves

The exchange reserves of many altcoins such as COMP, UMA, SNX and MKR have been increasing since June, noted @kryptonitetrading on CryptoQuant. However, the exchange reserves of AAVE and UNI have been declining, which may indicate that “healthy accumulation has been occurring during this bearish phase in the market,” according to @kryptonitetrading. As the tokens move off exchanges into wallets, it shows investor preference to hold rather than sell. 

Altcoin roundup

• Ether’s London Hard Fork: As the crypto community awaits the supposedly bullish London hard fork on the Ethereum blockchain, some analysts are taking a cautious stance on ether and foresee little price reaction after the upgrade. “I don’t expect much action in any direction,” trader and analyst Alex Kruger told CoinDesk’s Omkar Godbole. “The upgrade itself is overrated, and what matters is what happens after.” Ether is the native token of Ethereum’s blockchain, which is scheduled to undergo a hard fork, or backward-incompatible upgrade, called “London,” on Thursday. Once the upgrade takes effect, it is expected to bring a deflationary asset appeal to ether, possibly drawing more investment demand for the cryptocurrency.
• Kitco to Issue Gold-Backed Stablecoin: Kitco, a Canada-based provider of news and data on gold and other precious metals, is getting into the stablecoin game. Kitco Gold (KGLD) will be fully backed by physical gold held in Kitco’s DirectReserve vaults and will track the real-time market value of the yellow metal, CoinDesk’s Sebastian Sinclair reports. 
• New CoinDesk 20 List - MATIC Is In: MATIC, the native currency of the Polygon layer-2 network built on top of the Ethereum blockchain, has been added to CoinDesk 20, which ranks the most heavily traded assets in crypto, as measured by dollar volume on trusted exchanges. Beyond the addition of MATIC, dogecoin and ethereum classic have returned to the ranks of the CoinDesk 20 after being outperformed last quarter by a slew of decentralized finance (DeFi) assets. The three assets that were removed from the CoinDesk 20 in the third quarter were yearn.finance (YFI), nucypher (NU) and XTZ.

Relevant news:

Other markets

Most digital assets on CoinDesk 20 ended up higher on Wednesday. In fact everything was in the green except for dollar-linked stablecoins.

Notable winners of 21:00 UTC (4:00 p.m. ET):

Polkadot (DOT) +11.16%

Uniswap (UNI) +8.74%

Aave (AAVE) +8.68%