The Dubai Virtual Assets Regulatory Authority (VARA) has granted a Virtual Asset Service Provider (VASP) license to the cryptocurrency wallet provider, Backpack, leading to the launch of Backpack Exchange.
This VARA license allows Backpack to offer crypto exchange services in Dubai, marking a significant expansion of the company’s services. Backpack Exchange will feature a range of advanced features such as zero-knowledge (ZK) proof-of-reserves, multi-party computation (MPC) for custody, and low-latency order execution.
In a strategic move, Backpack has obtained operational licenses in several jurisdictions across the globe over the past five months. The flagship product, Backpack Wallet, is currently unregulated, but it’s designed to serve as a bridge for users transitioning from fiat to on-chain applications in the future.
Backpack CEO and co-founder Armani Ferrante emphasized the company’s commitment to enhancing transparency and compliance in the crypto exchange space. He highlighted the use of cryptographic techniques like zk-proofs and MPC, aiming to set higher standards for the industry.
Backpack Exchange will be available to existing Backpack and Mad Lads users starting in November 2023, with plans to open to the public in Q1 2024. During this time, Backpack will introduce additional trading functionalities, including derivatives, margin trading, and cross-collateralization.
The move to grant a VASP license to Backpack is in line with Dubai VARA’s recent efforts to create a crypto-friendly regulatory environment. In February 2023, the regulator introduced guidelines for VASPs operating in Dubai, emphasizing compliance with marketing, advertising, and promotion regulations.
Violators will face fines ranging from 20,000 UAE dirhams ($5,500) to 200,000 dirhams ($55,000), with repeat offenders potentially subject to fines as high as 500,000 dirhams ($135,000). This regulatory framework aims to ensure responsible and secure operations within the crypto industry in Dubai.