The seemingly simple acquisition hides Backpack's strategic ambitions.
Author: Deep Tide TechFlow
At the beginning of 2025, Backpack is making frequent moves.
Backpack announced that its official season will start in February 2025, and the long-awaited official derivatives features are on the horizon.
On January 7, Backpack became a hot topic in the news again.
Backpack announced the successful acquisition of the former FTX European business, which holds the EU's new regulation "Markets in Financial Instruments Directive II" (MiFID II) license. This acquisition has been approved by the FTX bankruptcy court and the Cyprus Securities and Exchange Commission (CySEC), and it is expected that Backpack EU will officially launch in the first quarter of 2025.
The seemingly simple acquisition hides Backpack's strategic ambitions.
Firstly, as part of the acquisition, Backpack will be responsible for distributing the bankruptcy claims for former FTX EU users, which means Backpack will directly gain over 110,000 new potential high-quality users. This is both a responsibility and an opportunity to earn user trust. If Backpack can properly handle the related claims and rebuild trust with users, these 110,000 European crypto users will become an important moat for Backpack in the future.
Therefore, in a recent interview with Bloomberg, Backpack CEO Armani Ferrante stated, "The top priority is to make FTX customers whole."
Secondly, the most strategically valuable aspect of this acquisition is obtaining the MiFID II license.
The Markets in Crypto-Assets Regulation (MiCA) will be fully implemented across the EU on December 30, 2024, which has strict regulations for exchange access. Many offshore exchanges without relevant licenses have been forced to close their derivatives businesses in Europe, making the compliant crypto derivatives market in Europe a blue ocean.
Through this acquisition, Backpack becomes the only platform in the EU holding qualifications for operating crypto derivatives such as perpetual contracts, serving the entire EU market, which accounts for about 20-30% of global crypto trading volume.
Finally, more forward-looking is that the MiFID II license is not only a cryptocurrency trading-related license but also a comprehensive financial license covering bond issuance, stock trading, wealth management, settlement and clearing, etc. In short, Backpack can conduct all the businesses that traditional financial institutions like Goldman Sachs can in the EU.
This means that Backpack will also develop traditional financial services, including stocks and bonds in the future. This advantage positions it to create a comprehensive service platform that integrates "crypto + traditional finance," accelerating the fusion of traditional financial business with crypto assets.
For example, in the future, Backpack EU could achieve seamless integration of cryptocurrency trading with traditional payment systems, including using the Single Euro Payments Area (SEPA), which is currently the most widely used payment method in Europe, allowing electronic transfer payments to any country/region in the Eurozone.
Once the two-way payment flow between cryptocurrencies and fiat currencies is established, whether buying and selling cryptocurrencies with fiat or trading traditional financial assets like stocks with cryptocurrencies, it is worth looking forward to.
This will create a competitive advantage for Backpack over other offshore cryptocurrency exchanges; while they may seem similar, they are essentially on different tracks.
In summary, Backpack's differentiation is reflected in four aspects: first, adhering to a compliance-first development strategy, quickly obtaining compliance qualifications through the acquisition of licensed businesses; second, having a global vision from the start, strategically laying out the European market, becoming the only platform in the EU holding qualifications for operating crypto derivatives such as perpetual contracts; third, focusing on business innovation by combining traditional finance with crypto business; and finally, having a comprehensive ecological layout of CEX + Wallet + NFT.
As a comprehensive platform with an exchange (Backpack Exchange), wallet (Backpack Wallet), and NFT ecosystem (Mad Lads), Backpack is fully preparing for future growth through this acquisition. As the cryptocurrency market gradually moves towards standardization, its emphasis on compliance and user experience will provide the platform with a unique competitive advantage.
Backpack EU is expected to officially launch in the first quarter of 2025. This is not only an important milestone in the platform's development but also crucial for restoring the confidence of European users who were previously harmed by FTX. In 2025, Backpack is off to a good start.
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