The Dubai Virtual Assets Regulatory Authority (VARA) has issued a Virtual Asset Service Provider (VASP) license to the crypto wallet Backpack, resulting in the launch of Backpack Exchange.
Backpack’s VARA license is limited to crypto exchange services in Dubai and does not allow the company to offer any other of its virtual asset products and services. According to the announcement, the Backpack exchange incorporates zero-knowledge proof of reserves (zk-proofs), Multi-Party Computation (MPC) for custody and low latency order execution, among other features.
The announcement also revealed that the Backpack exchange bagged operational licenses across several jurisdictions worldwide over the past five months.
— Backpack (@xNFT_Backpack) October 31, 2023
The flagship Backpack Wallet currently stands as an unregulated product; however, it is designed to help users transition from fiat to on-chain applications in the future. Backpack CEO and co-founder Armani Ferrante shared his intent to “put an end” to the opacity of crypto exchanges.
Speaking against the norm of running full-fledged crypto exchanges with a single point of failure and without proof of reserves or auditability, Ferrante 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.”
Existing Backpack and Mad Lads users will gain initial access to the Backpack exchange from November 2023 and will be made public in Q1 of 2024. During this time, Backpack plans to add various trading functionalities such as derivatives, margin, and cross-collateral into its offering
Backpack has not yet responded to Cointelegraph’s request for comment.
Dubai VARA regulator issued various degrees of operational licenses to numerous crypto exchanges over the past year, further strengthening its position as a crypto-friendly jurisdiction.
Dubai’s Vurtual Assets and Regulatory Authority issued the long-awaited Full Market Regulations for Vurtual Assets Services Providers (VASPs).
— Irina ₿. Heaver (@IrinaHeaver) February 7, 2023
In February 2023, the regulator issued new guidelines for VASPs operating within the emirate. All crypto exchanges must adhere to marketing, advertising and promotions regulations. Violators will be fined between 20,000 dirhams ($5,500) and 200,000 dirhams ($55,000), and repeat offenders could see fines as high as 500,000 dirhams ($135,000).