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Backpack, a Solana-based NFT wallet app, announced Tuesday it will launch a regulated cryptocurrency exchange called Backpack Exchange. The exchange received a Virtual Asset Service Provider license for Exchange Services from the Dubai Virtual Assets Regulatory Authority (VARA).
VARA, which oversees virtual asset activities in Dubai, granted the license after a "rigorous" evaluation process, according to a VARA spokesperson. The spokesperson said in a statement that Backpack Exchange "must be recognized for [its] commitment to prioritize investor protection and risk assurance."
Coral is the company behind the Backpack app, the Solana-based xNFT (or "executable NFT") standard for NFT-based apps and experiences, and the prominent Mad Labs profile picture (PFP) collection on Solana.
Backpack Exchange has yet to open to the public, but Coral said in a release that it has been in development for five months and is built around technologies like zero-knowledge proof of reserves and multi-party computation (MPC). The VARA license covers only Backpack Exchange, not other services and features within the Backpack app.
Sign up for the waitlist https://t.co/44tITBLJSA 🎒 https://t.co/Wy5zQQLLum pic.twitter.com/aTE9FqmyJ3
— Backpack 🎒 (@xNFT_Backpack) October 31, 2023
"It shouldn't be normal to use an exchange with a single point of failure, without proof of reserves, or without auditability," said Backpack founder and CEO Armani Ferrante, in a release. "Backpack Exchange hopes to raise the bar for transparency and compliance to demonstrate the best this technology has to offer. Don't trust, verify."
Ferrante's comments come following Coral's experience with the collapsed crypto exchange FTX, which shuttered in November 2022. Coral had $14.5 million in investment funding (out of $20 million total raised) held on the platform at the time that it closed, which remains inaccessible to the founders. That amount included $10 million from FTX Ventures.
Backpack Exchange will initially launch in private beta in November for members of Coral's existing Backpack and Mad Lads communities. It plans to open to the general public in the first quarter of 2024. The exchange will start with spot trading of cryptocurrencies and later expand to derivatives, margin trading, and more as Backpack obtains additional licenses globally, according to the release.
Editor’s note: This article was written with the assistance of AI. Edited and fact-checked by Andrew Hayward.