The new exchange has already obtained a VASP license from the Dubai Virtual Assets Regulatory Authority. Named Backpack exchange, the trading platform will enter Beta testing next month with hopes of opening to the public by Q1 2024.
“Backpack Exchange has developed a next-generation exchange that incorporates a novel zero-knowledge proof of reserves, or zk-proofs, Multi-Party Computation, or MPC, for custody, and low latency order execution,” the company said in a statement.
CEO and founder of Backpack Armani Ferrante who was a research engineer at Alameda faced difficult times following the collapse of FTX which was a key player in his effort to raise funds for Coral, the former name of Backpack. The incident could be the reason Ferrante wants to create his own exchange.
“It’s time to put an end to the days of opaque crypto exchanges representing everything our industry stands against,” he said in a statement. “It shouldn’t be normal to use an exchange with a single point of failure, without proof of reserves, or without auditability,” he added.
The exchange will provide a safe place for investors and traders in Dubai to trade digital assets without any fear of a collapse or other risks associated with crypto exchanges. The exchange will also provide the full range of exchange services to users, it said in a statement.
“The Backpack Exchange team will be working to add in various trading functionalities such as derivatives, margin [and] cross-collateral,” the company also said.
Dubai Approves Another Exchange
Dubai has become a major destination for cryptocurrency companies from all over the world. This is partly because of the regulatory clarity brought about by the Virtual Asset Regulatory Agency (VARA), the body responsible for crypto regulation in the city.
It is also because Dubai and the United Arab Emirates (UAE) in general have clearly shown that they are willing to support the growth of crypto and blockchain innovation in the country.
As a result, several exchanges have run to the authorities of Dubai for regulatory licenses and many have been approved. These include Binance, Coinbase, Bybit, and many other less known exchanges. In fact, Bybit recently moved its global headquarters to Dubai because of the crypto-friendliness of the place.
Going forward, Dubai may be getting many more applications from both new and old exchanges in other parts of the world.
U.S Driving Away Innovation
While Dubai is embracing crypto companies, one of the countries that are actively driving away innovation is the U.S. The country’s regulators recently went all out in regulating cryptocurrencies by enforcement.
This approach has led to the departure of several top exchanges from the country, including Bittrex. There have been calls by lawmakers for the securities and exchange commission (SEC) which is at the forefront of the crypto crackdown to not drive away innovation.
However, the agency has remained adamant and continues to hunt crypto startups till today. The biggest challenge is that there’s no clear regulatory guidance for the industry, something Coinbase has challenged in court and now seeks the support of lawmakers.
Hopefully though, a legal framework for crypto regulation may be on its way, which will potentially end the trouble the industry faces currently.