License gives Backpack Exchange full clearance to operate in Dubai, setting standards for transparency in the digital asset space
Backpack, the all-in-one web3 wallet and company behind Mad Lads, the No. 1 NFT collection by market cap on Solana, announced the launch of a regulated cryptocurrency exchange. Trek Labs Ltd FZE, which will launch under the name Backpack Exchange, has officially been issued the Virtual Asset Service Provider (VASP) license for Exchange Services from the Dubai Virtual Assets Regulatory Authority (VARA), which supervises and regulates all virtual asset activities across the Emirate of Dubai. This license only covers Backpack Exchange and not any of the other virtual asset products and services offered by Backpack.
Over the past five months, Backpack Exchange has developed a next-generation exchange that incorporates a novel zero-knowledge proof of reserves (zk-proofs), Multi-Party Computation (MPC) for custody, and low latency order execution, while also securing licenses in several jurisdictions worldwide and establishing premium fiat on and off ramps for users. The combination of Backpack Exchange and Backpack Wallet (which is currently an unregulated product) is designed to provide the smoothest transition for users from fiat to on-chain applications. While Backpack Wallet users already have access to a variety of dApps and executable NFTs (xNFTs) unique to Backpack, they will now be able to conduct trades on the exchange directly in the app.
VARA’s VASP license for Exchange Services allows crypto businesses to exchange virtual assets for all types of customers. As the world’s first independent regulator for virtual assets, VARA serves as a transparent and trusted guiding authority for the emerging world of virtual assets. In early 2023, VARA released the world’s first, tailor-made regime for regulating virtual assets.
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Armani Ferrante, CEO and Founder of Backpack, stated “It’s time to put an end to the days of opaque crypto exchanges representing everything our industry stands against. It shouldn’t be normal to use an exchange with a single point of failure, without proof of reserves, or without auditability. A verifiable, unforgeable ledger is the exact problem blockchains solve, and Backpack Exchange is taking full advantage of that. 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.”
VARA Spokesperson noted, “Dubai’s VA sector is fully regulated and VARA’s founding principles have been anchored on the need to structure guardrails for market security while remaining progressive and responsive to innovation. To this end, the licensing process is rigorous in its evaluation of suitably qualified ‘responsible’ participants that can serve as the UAE’s bar for convergence across global jurisdictions. In keeping with Dubai’s repute as a preferred global hub for entrepreneurship, Backpack Exchange must be recognised for their commitment to prioritise investor protection and risk assurance, and VARA appreciates their readiness to fulfil necessary prerequisites that has made them among the first VA exchanges to secure a full market licence within the VARA regime.”
Backpack Exchange will launch in private beta for existing Backpack and Mad Lads community members this November. The beta will feature spot crypto trading functionality. The exchange is set to go live to the public in Q1 of 2024. The Backpack Exchange team will be working to add in various trading functionalities such as derivatives, margin, cross-collateral while its compliance team with decades of experience from Barclays, State Street, HSBC, Coinbase, and other prominent financial institutions continue to secure additional licenses around the world.
Backpack is an all-in-one web3 app that functions as a noncustodial wallet, allowing users to download and interact with xNFTs, a popular NFT standard that tokenizes applications.
Trek Labs Ltd FZE dba Backpack Exchange is a cryptocurrency exchange that is supervised by VARA. Backpack Exchange is currently not available in certain jurisdictions including Japan, Canada, and the United Kingdom.
Established in March 2022, following the effect of Law No.4 of 2022, VARA is the competent entity in charge of regulating, supervising, and overseeing VAs and VA Activities in all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre. VARA plays a central role in creating Dubai‘s advanced legal framework to protect investors and establish international standards for Virtual Asset industry governance, while supporting the vision for a borderless economy.
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