The Dubai Virtual Assets Regulatory Authority (VARA) Grants VASP License to Backpack
The Dubai Virtual Assets Regulatory Authority (VARA) has issued a Virtual Asset Service Provider (VASP) license to the crypto wallet Backpack, leading to the launch of Backpack Exchange. However, the license is limited to crypto exchange services in Dubai, and Backpack is not allowed to offer any other virtual asset products and services. The newly launched Backpack Exchange incorporates features such as zero-knowledge proof-of-reserves, multi-party computation for custody, and low-latency order execution.
Backpack Aims for Transparency and Compliance
Backpack CEO and co-founder Armani Ferrante intends to bring transparency to crypto exchanges. He plans to use cryptographic techniques like zk-proofs, MPC, and state machine replication to raise the bar for transparency and compliance. Ferrante emphasizes the importance of verification rather than blind trust.
Access and Future Plans
Existing users of Backpack Wallet and Mad Lads will have initial access to Backpack Exchange starting from November 2023. The platform will be made available to the public in Q1 2024. During this time, Backpack plans to introduce various trading functionalities, including derivatives, margin trading, and cross-collateral.
Dubai’s Crypto-Friendly Jurisdiction
The Dubai VARA regulator has been granting operational licenses to numerous crypto exchanges over the past year, solidifying its position as a crypto-friendly jurisdiction. In February 2023, the regulator issued new guidelines for VASPs operating within the emirate, imposing fines on violators who do not adhere to marketing, advertising, and promotion regulations.
Hot Take: Dubai Strengthens Its Crypto Ecosystem with VARA Licenses
The issuance of a VASP license to Backpack by the Dubai VARA is a significant step in strengthening Dubai’s crypto ecosystem. The license allows Backpack to provide crypto exchange services in Dubai, promoting transparency and compliance in the industry. With the incorporation of advanced cryptographic techniques, Backpack Exchange aims to set a new standard for crypto exchanges. The move highlights Dubai’s commitment to becoming a leading global hub for cryptocurrencies and blockchain technology.
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