Backpack announces launch of cryptocurrency exchange

Backpack, the all-in-one web3 wallet and company behind Mad Lads, the No. 1 NFT collection by market cap on Solana, today announced the launch of a regulated cryptocurrency exchange. Trek Labs Ltd FZE, which will launch under the name Backpack Exchange, has officially been issued the Virtual Asset Service Provider (VASP) license for Exchange Services from the Dubai Virtual Assets Regulatory Authority (VARA), which supervises and regulates all virtual asset activities across the Emirate of Dubai. This license only covers Backpack Exchange and not any of the other virtual asset products and services offered by Backpack.Over the past five months, Backpack Exchange has developed a next-generation exchange that incorporates a novel zero-knowledge proof of reserves (zk-proofs), Multi-Party Computation (MPC) for custody, and low latency order execution, while also securing licenses in several jurisdictions worldwide and establishing premium fiat on and off ramps for users. The combination of Backpack Exchange and Backpack Wallet (which is currently an unregulated product) is designed to provide the smoothest transition for users from fiat to on-chain applications. While Backpack Wallet users already have access to a variety of dApps and executable NFTs (xNFTs) unique to Backpack, they will now be able to conduct trades on the exchange directly in the app.VARA’s VASP license for Exchange Services allows crypto businesses to exchange virtual assets for all types of customers. As the world's first independent regulator for virtual assets, VARA serves as a transparent and trusted guiding authority for the emerging world of virtual assets. In early 2023, VARA released the world’s first tailor-made regime for regulating virtual assets.VARA Spokesperson noted: “Dubai’s VA sector is fully regulated and VARA’s founding principles have been anchored on the need to structure guardrails for market security while remaining progressive and responsive to innovation. To this end, the licensing process is rigorous in its evaluation of suitably qualified ‘responsible’ participants that can serve as the UAE’s bar for convergence across global jurisdictions. In keeping with Dubai’s repute as a preferred global hub for entrepreneurship, Backpack Exchange must be recognised for their commitment to prioritise investor protection and risk assurance, and VARA appreciates their readiness to fulfil necessary prerequisites that has made them among the first VA exchanges to secure a full market license within the VARA regime”.Armani Ferrante, CEO and Founder of Backpack, stated: “It's time to put an end to the days of opaque crypto exchanges representing everything our industry stands against. It shouldn't be normal to use an exchange with a single point of failure, without proof of reserves, or without auditability. A verifiable, unforgeable ledger is the exact problem blockchains solve, and Backpack Exchange is taking full advantage of that. Using cryptographic techniques like zk-proofs, MPC, and state machine replication, Backpack Exchange hopes to raise the bar for transparency and compliance to demonstrate the best this technology has to offer. Don't trust, verify.”Backpack Exchange will launch in private beta for existing Backpack and MadLads community members this November. The beta will feature spot crypto trading functionality. The exchange is set to go live to the public in Q1 of 2024. The Backpack Exchange team will be working to add in various trading functionalities such as derivatives, margin, cross-collateral while its compliance team, with decades of experience from Barclays, State Street, HSBC, Coinbase, and other prominent financial institutions continues to secure additional licenses around the world.

KIB sheds light on the dangers of investing in virtual assets

Kuwait: Kuwait International Bank (KIB) remains committed to its social responsibility and awareness efforts through its support of the ‘Let’s Be Aware’ (Diraya) campaign, launched by the Central Bank of Kuwait in cooperation with the Kuwait Banking Association. As part of this commitment, KIB has been shedding light on the dangers of trading and investing in virtual assets or cryptocurrencies on its various electronic and social media platforms. The Bank has also been sharing information about the negative impact of virtual investments on investors' and traders’ assets and funds.Commenting on this issue, General Manager of KIB’s Investment Department Jamal Al-Barrak said: “We are witnessing major and rapid changes in the digital world. Innovative means of investment, such as virtual assets and cryptocurrencies, are emerging. While these new opportunities hold the potential for significant gains, KIB is aware of their various risks and negative impacts that investors and traders should also acknowledge. As a financial institution that adheres to regulations and statutes, KIB stresses the urgency of avoiding the use of or trade in digital currencies or digital assets, as they have no legal status and are not linked to any official issuing body.”Al-Barrak then moved on to discuss the dangers of investing in encrypted virtual assets. He pointed out that citizens may be attracted to these investments because of their high returns and the desire to achieve quick profit. However, the reality is, he stated, that investing in virtual assets carries high risks, most notably the loss of the fully invested funds in a mere second, given that the prices of these assets are always driven by speculations that expose their value to sudden and unexpected sharp drops. Al-Barrak added: “Dealers and traders of digital assets should be aware that if things go wrong, they will not have any protection like when investing in a product subject to national banking regulations.”Moreover, Al-Barrak addressed the electronic risks that threaten the assets of investors in virtual currencies. He said that digital trading and storage platforms could become exposed to piracy, cyberattacks, or electronic breaches. He explained that thousands of people trade on these platforms using cryptocurrencies, noting that each platform controls the prices and the form of transactions. Thus, if any of these platforms were electronically hacked and went out of service, the value of its currency will decrease within moments, and the entire trading movement will fluctuate, he said.Highlighting the importance of KIB customers paying attention to the dangers of misleading advertisements, Al-Barrak said that social media platforms have become a breeding ground for inaccurate information and false promises. He called on all customers to practice extreme caution upon coming across advertisements for virtual assets that seem incredibly convincing. He said: “Most of the time, the identity of the issuers and marketers of these virtual currencies is unknown, or they hail from unknown or illegal entities. Therefore, virtual traders can use fake names or advanced technologies, such as artificial intelligence, to persuade investors with promises of quick and guaranteed returns.”Concluding his remarks, Al-Barrak noted the importance of extensive investigation and research, and adequate study of any investment field to cover all its particulars. This would ensure that the investor achieves positive results and maintains their capital. On the other hand, he stressed the need for joint action between banking institutions to raise investors' and citizens' awareness of the risks surrounding investing in virtual assets and cryptocurrencies in order to protect the national financial system.

Kuwait bans cryptocurrency to combat money laundering

Kuwait has declared a ban on cryptocurrency for payments or investments, aimed at thwarting money laundering activities.The Capital Markets Authority (CMA) of the country has introduced a set of regulations that impose an "absolute ban" on the usage of digital currencies in the context of making payments. These regulations go as far as declaring all virtual assets as illegal. Furthermore, the CMA has also disallowed digital asset mining and disavowed crypto as a decentralized form of currency. Businesses are prohibited from offering any services related to cryptocurrencies.However, it is crucial to note that this prohibition does not apply to securities regulated by the Central Bank of Kuwait or other securities and financial instruments overseen by the Capital Markets Authority, as explicitly stated in the circular.The Central Bank of Kuwait, together with the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit, have issued circulars pertaining to the supervision of virtual assets used as a means of payment or recognized as decentralized currency in Kuwait. They have emphasized on abstaining from engaging in transactions that involve virtual currency as a payment method within the boundaries of this prohibition, as reported by Al-Jarida daily.These circulars are aligned with the recommendations set forth by the Financial Action Task Force (FATF) and the National Committee for Combating Money Laundering and Financing of Terrorism, aiming to enforce the implementation of Recommendation No 15 of the international requirements issued by FATF. As a consequence, dealing with virtual assets as an investment tool is strictly prohibited.Moreover, it is of utmost importance to refrain from providing any services related to virtual assets to customers, issuing licenses to individuals or entities for offering virtual asset services as a business, either for personal gain or on behalf of others. Notably, no such licenses have been granted previously. The circulars also extend the ban to encompass all virtual currency mining activities.The CMA stresses that the ban aligns with the guidelines put forth by the Financial Action Task Force on crypto assets and is a direct result of the study conducted by the National Committee for Combating Money Laundering and Terrorist Financing.