Backpack Exchange, a crypto trading firm founded by former Alameda Research and FTX employees, has acquired the European arm of the bankrupt FTX for $32.7 million. The acquisition of FTX EU, which holds a MiFID II-license under the Cyprus Securities and Exchange Commission (CySEC), marks a strategic move for Backpack to expand its offerings in the European crypto market. The firm plans to introduce regulated crypto derivatives across the EU, starting with perpetual futures.

FTX EU Acquisition

FTX EU, the failed European division of Sam Bankman-Fried’s empire, has been sold to Backpack Exchange for $32.7 million. The acquisition is part of Backpack’s larger strategy to become a leading provider of regulated crypto trading products in Europe. FTX EU holds a MiFID II license, granted by the Cyprus Securities and Exchange Commission (CySEC), enabling it to offer services under European financial regulations.

Backpack Exchange was founded by former employees of Alameda Research and FTX, and the firm aims to leverage FTX EU’s regulatory license to bring innovation to the European crypto derivatives market. Armani Ferrante, CEO of Backpack Exchange, emphasized that the acquisition provides the company with a competitive edge, particularly with its unique position as the only regulated perpetual futures provider across Europe.

Plans for Crypto Derivatives in Europe

Backpack’s immediate focus is on rolling out a full suite of crypto derivatives, starting with perpetual futures contracts, which are currently not offered by any other regulated exchanges in Europe. The firm intends to capitalize on its position as the sole provider of regulated perpetual futures in the EU, taking aim at competing platforms like Panama-based Deribit, which currently dominates the crypto derivatives market.

Ferrante revealed that Backpack’s MiCA (Markets in Crypto Assets) notification has already been submitted, with the firm expecting to go live with its offerings in the first quarter of 2025. MiCA is the new European regulation aimed at providing a legal framework for crypto-asset services, ensuring more robust oversight of the crypto market. Backpack’s MiCA notification will allow the firm to expand its services under the upcoming regime.

Regulatory Edge and Market Strategy

In recent years, the European crypto landscape has seen increasing regulatory scrutiny. The MiFID II license held by FTX EU gives Backpack a solid foundation to expand its offerings within the confines of the law. With several major crypto trading firms, including Bitstamp and Coinbase, having received their MiFID II licenses, Backpack aims to offer a more comprehensive range of crypto derivatives and become a key player in Europe’s evolving regulatory environment.

The company’s roadmap includes not just perpetual futures but also other crypto-asset services, which will roll out progressively. However, some of these products may not debut in the first quarter of 2025. As Ferrante highlighted, Backpack is committed to delivering innovative, regulated products in line with European financial regulations, which would distinguish them from unregulated players in the crypto market.

Future Prospects and Funding

Backpack Exchange’s growth is supported by a solid financial backing. The firm raised $17 million in funding last year, which it will use to scale operations and improve its product offerings. Its leadership has been involved in the Solana ecosystem and established successful ventures in the wallet and NFT space. The acquisition of FTX EU and the planned expansion into crypto derivatives represents a major step towards consolidating Backpack’s position as a leader in the European crypto market.

With the regulatory landscape in Europe becoming more structured and the MiCA regime offering clearer guidelines for crypto firms, Backpack is poised to benefit from the growing demand for regulated crypto trading options. The company’s innovative approach to offering perpetual futures contracts and other derivatives could shift the dynamics of the European market, potentially attracting a diverse range of traders.