In a significant development in the cryptocurrency trading landscape, FTX EU, the European arm of Sam Bankman Fried’s now-bankrupt cryptocurrency trading empire, has been sold to Backpack Exchange, a crypto trading company founded by former Alameda Research and FTX employees.

Background on FTX EU

FTX EU, which held a MiFID II-license under the Cyprus Securities and Exchange Commission (CySEC), was part of the collapsed cryptocurrency trading empire. The sale of FTX EU to Backpack Exchange marks a significant turning point for both companies, as it allows Backpack to expand its operations in Europe.

Details of the Sale

The sale of FTX EU to Backpack Exchange was announced recently, with the exact details of the deal still emerging. According to reports, the exchange cost Backpack $32.7 million, making it one of the most significant acquisitions in the crypto trading space in recent times.

Backpack Exchange’s Plans for FTX EU

Armani Ferrante, CEO of Backpack Exchange, has outlined the company’s plans for FTX EU, which include offering a full suite of crypto derivatives throughout the EU. This move is expected to capitalize on Backpack’s position as the only regulated perpetual futures provider across Europe.

“Once we return FTX EU customers’ funds, we’re excited to begin serving a regulated perpetual futures product as a priority," Ferrante said via email. "A full suite of products is being worked on, although some of these may not roll out in Q1."

MiFID License and MiCA Regime

The acquisition of FTX EU by Backpack Exchange comes at a time when the European Union has introduced new regulations for cryptocurrency trading firms. The Markets in Crypto Assets (MiCA) regime has been established to provide a comprehensive framework for crypto-asset services, including derivatives.

Several crypto trading firms have applied for a MiFID license under the MiCA regime, which allows firms to offer crypto-asset services across Europe. Among those that have received their licenses are Bitstamp and Coinbase, while D2X, based in the Netherlands, has also been granted a license and plans to deliver USD-denominated futures and options early this year.

Shift in Crypto Derivatives Market

The acquisition of FTX EU by Backpack Exchange is expected to disrupt the current dynamics of the crypto derivatives market. The firm’s position as the only regulated perpetual futures provider across Europe is likely to attract a significant number of customers, shifting the balance of power away from established players like Deribit.

“Even though a few firms have been able to acquire approval for a limited form of a derivatives license, we’re not aware of any players that currently offer perpetuals and are live in the EU, including Coinbase and Bitstamp," Ferrante said via email. "Once we return FTX EU customers’ funds, we’re excited to begin serving a regulated perpetual futures product as a priority."

Backpack Exchange’s Background

Backpack Exchange was founded by former Alameda Research and FTX employees, who have contributed significantly to the Solana ecosystem. The company has also established a successful wallet and NFT business, raising $17 million in funding last year.

Timeline for Launch

Ferrante has outlined the timeline for Backpack’s launch in Europe, with the firm expecting to go live in the first quarter of 2025. The exact date is yet to be announced, but it marks a significant milestone for both FTX EU and Backpack Exchange.

Conclusion

The sale of FTX EU to Backpack Exchange marks a new chapter in the cryptocurrency trading landscape. With its position as the only regulated perpetual futures provider across Europe, Backpack Exchange is expected to disrupt the current dynamics of the crypto derivatives market. The launch of a full suite of products is expected to attract a significant number of customers, shifting the balance of power away from established players.

Key Points

  • FTX EU has been sold to Backpack Exchange for $32.7 million.
  • Backpack Exchange plans to offer a full suite of crypto derivatives throughout the EU.
  • The firm will capitalize on its position as the only regulated perpetual futures provider across Europe.
  • Several crypto trading firms have applied for a MiFID license under the MiCA regime, including Bitstamp and Coinbase.
  • D2X, based in the Netherlands, has also been granted a license and plans to deliver USD-denominated futures and options early this year.

References

  • [1] "Backpack Exchange Acquires FTX EU for $32.7 Million" by CoinDesk
  • [2] "FTX EU Sold to Backpack Exchange as Part of Bankruptcy Proceedings" by Bloomberg
  • [3] "Regulated Perpetual Futures Provider Backpack Exchange Plans Q1 Launch in Europe" by CryptoSlate