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In a noteworthy move, Backpack, a distributor of cryptocurrency wallets, received a Virtual Asset Service distributor (VASP) license from the Dubai Virtual Assets Regulatory Authority (VARA), which paved the way for the Backpack Exchange to open.
With its VARA license, Backpack is able to provide cryptocurrency exchange services just to the Dubai market, excluding its full range of virtual asset products. Advanced features including multi-party computation (MPC) for custody, low-latency order execution, and zero-knowledge (ZK) proof-of-reserves are all included in the recently launched Backpack Exchange. It is anticipated that these characteristics would establish new industry norms for compliance and openness.
Backpack CEO and co-founder Armani Ferrante emphasized the need to enhance transparency in the cryptocurrency exchange arena. He expressed his commitment to eliminating the opacity commonly associated with many crypto exchanges. He stated, “Using cryptographic techniques like zk-proofs, MPC, and state machine replication, Backpack Exchange hopes to raise the bar for transparency and compliance to demonstrate the best this technology has to offer. Don’t trust, verify.”
The Backpack Wallet, the company’s main product, is currently classified as an unregulated offering. Its architecture is focused on making it easier for customers to switch in the future from fiat money to on-chain apps.
Beginning in November 2023, current Backpack and Mad Lads users will get first dibs on the Backpack Exchange. The exchange will open to the public in the first quarter of 2024. Backpack plans to broaden the breadth of its services during this deployment time by introducing a number of new trading functions, including as derivatives, margin trading, and cross-collateralization.
Regarding this recent development, Cointelegraph reached out to the firm for remarks, but they haven’t replied yet.
The city’s standing as a crypto-friendly jurisdiction has been strengthened by Dubai’s VARA regulator, which has been aggressive in granting operating licenses to many cryptocurrency exchanges over the last year.
The regulatory body modified its criteria in February 2023, imposing stricter limits for marketing, advertising, and promotion for Virtual Asset Service Providers (VASPs) operating in Dubai. Fines for infractions range from 20,000 UAE dirhams ($5,500) to 200,000 dirhams ($55,000), with repeat offenders potentially facing fines of up to 500,000 dirhams ($135,000). This demonstrates Dubai’s dedication to maintaining a crypto economy that is well-regulated.