Backpack, a well-known NFT wallet app operating on the Solana blockchain, made a significant announcement regarding its forthcoming crypto exchange, the Backpack Exchange, earlier this week.
Backpack, which is powered by Coral, is not merely an NFT wallet app. It’s best known for introducing the xNFT standard, often referred to as the “executable NFT,” and for its affiliation with the renowned Mad Labs profile picture (PFP) collection on Solana.
Despite the anticipation surrounding it, Backpack Exchange is not yet accessible to the public. Coral revealed that the exchange, which has been in development for five months, is reliant on advanced technologies such as zero-knowledge proof of reserves and multi-party computation (MPC).
It is vital to understand that VARA’s license exclusively applies to Backpack Exchange and does not encompass the broader range of services offered within the Backpack app.
Backpack’s founder and CEO, Armani Ferrante, stressed the importance of transparency and compliance in exchanges, saying,
“It shouldn’t be usual to use an exchange that lacks proof of reserves, auditability, or has a single point of failure.”
Ferrante’s statement resonates with the lessons learned from Coral’s previous involvement with the ill-fated FTX exchange, which suffered a significant loss of $14.5 million when it closed in November 2022.
Backpack successfully obtained a Virtual Asset Service Provider license from the Virtual Assets Regulatory Authority (VARA) in Dubai, enabling the company to proceed with the exchange.
VARA, responsible for overseeing virtual asset activities in Dubai, granted the license after a rigorous evaluation process. A VARA spokesperson praised Backpack Exchange for its commitment to investor protection and risk management, emphasizing the comprehensive assessment it underwent.
The highly anticipated Backpack Exchange is scheduled for a private beta launch in November, initially accessible to members of Coral’s Backpack and Mad Lads communities. The general public can expect access in the first quarter of 2024. Initially focusing on spot trading of cryptocurrencies, the exchange has ambitions to expand into derivatives, margin trading, and more, pending the acquisition of additional global licenses.