The Dubai Virtual Assets Regulatory Authority (VARA) has granted a Virtual Asset Service Provider (VASP) license to the crypto wallet Backpack, allowing the launch of Backpack Exchange. The VASP license is limited to crypto exchange services in Dubai, with features including zero-knowledge proof-of-reserves, multi-party computation for custody, and low-latency order execution.


The Dubai Virtual Assets Regulatory Authority (VARA) has granted a Virtual Asset Service Provider (VASP) license to the crypto wallet Backpack, enabling the launch of Backpack Exchange. This license is specifically for providing crypto exchange services in Dubai.


Backpack Exchange incorporates several features, including zero-knowledge proof-of-reserves, multi-party computation (MPC) for custody, and low-latency order execution.


The announcement revealed that Backpack Exchange has obtained operational licenses in multiple jurisdictions worldwide over the past five months. However, it's essential to note that Backpack's flagship product, the Backpack Wallet, is currently unregulated. The company aims to help users transition from fiat to on-chain applications in the future.


Backpack's CEO and co-founder, Armani Ferrante, emphasized the company's commitment to transparency and compliance, stating that their goal is to demonstrate the best that technology has to offer. He emphasized the importance of cryptographic techniques such as zk-proofs, MPC, and state machine replication to enhance transparency.


Existing users of Backpack and Mad Lads will receive initial access to Backpack Exchange starting in November 2023, with plans to make it available to the public in Q1 2024. During this period, Backpack intends to expand its offerings by adding various trading functionalities like derivatives, margin, and cross-collateral.


Dubai's VARA regulator has been issuing operational licenses to several crypto exchanges over the past year, establishing the emirate as a crypto-friendly jurisdiction. In February 2023, the regulator introduced new guidelines for virtual asset service providers (VASPs) operating in Dubai, emphasizing compliance with marketing, advertising, and promotion regulations. Violators could 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).


(ARIJIT SARKAR, COINTELEGRAPH, 2023)