Backpack Granted VASP License from Dubai VARA

The Dubai Virtual Assets Regulatory Authority (VARA) has issued a Virtual Asset Service Provider (VASP) license to crypto wallet Backpack to launch its Backpack Exchange.

Backpack Exchange is a cryptocurrency exchange platform licensed by VARA to provide exchange services exclusively in Dubai.

The license does not allow Backpack to offer its other virtual asset products and services.

In an announcement, Backpack Exchange offers multi-party computation (MPC) for custody, zero-knowledge (ZK) proof-of-reserves, and low-latency order execution.

According to the announcement, Backpack Exchange has obtained operational licenses from various jurisdictions worldwide over the past five months.

Backpack Exchange will be initially accessible to existing Backpack and Mad Lads users at the beginning of this month, with plans to be made for the public in the first quarter of 2024.

Backpack has plans to incorporate various trading functionalities, such as margin, cross-collateral, and derivatives, into its offerings during the current period.

The Backpack Wallet, which is currently unregulated, has been designed to facilitate users in transitioning from fiat to on-chain applications in the future.

In this context, Armani Ferrante, the CEO and co-founder of Backpack, expressed his interest in addressing the lack of transparency in crypto exchanges, saying: “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.”

Over the past year, the Dubai VARA regulator was quite active in issuing operational licenses to multiple crypto exchanges, a matter which enhanced the emirate’s position as a crypto-friendly hub.

In February 2023, the watchdog updated its guidelines for VASPs operating within the emirate.

According to the new guidelines, all crypto exchanges must comply with the marketing, advertising, and promotion regulations. Those who violate these regulations may face fines starting from 20,000 UAE dirhams ($5,500) to 200,000 dirhams ($55,000), while in case of repeating, violators may be fined up to 500,000 dirhams ($135,000).