Episode Summary: Backpack EU Launches with Daily Proof of Reserves

Podcast: Markets Outlook
Host: CoinDesk
Guest: Armani Ferrante, CEO of Backpack
Date: September 10, 2025

Episode Overview

This episode spotlights the launch of Backpack EU, a new regulated crypto derivatives exchange powered by Backpack, following its acquisition of FTX EU. Host Jen (CoinDesk) interviews Backpack CEO Armani Ferrante about the challenges of bringing a regulated exchange to Europe under the MiFID 2 framework, Backpack's innovations in trust and transparency—particularly its commitment to daily cryptographic proof of reserves—and the company's global expansion strategy.

Key Discussion Points and Insights

Building Trust and Confidence—"Brick by Brick"

• Trust, Ferrante argues, is something built over time through repeated actions and continual improvement.
  • [00:00] Armani Ferrante: “Confidence and trust is something that ultimately it's built every day over a lifetime. There's not any one thing that you could ultimately attribute it to.”
• Backpack’s philosophy is iterative: focusing on product quality through relentless, incremental work.
  • [01:17] Armani Ferrante: “My favorite saying is brick by brick… there’s a million little bricks that we build over a long period of time that end up making a beautiful home.”

Backpack EU Launch and Regulatory Achievements

• Backpack EU becomes one of the first in Europe to offer regulated perpetual futures, alongside Kraken, under the MiFID 2 regulatory framework.
• The process:
  • Was arduous, with over two years of preparatory work and more than a year of due diligence.
  • Required not just capital, but deep commitment to regulatory compliance.
    • [02:39] Armani Ferrante: “…it was over a year long process just for diligence and all of the details that go into meeting the bar of a framework as renowned and rigorous as MiFID… certainly a long, arduous process that's not for the faint of heart.”

Addressing the FTX Legacy

• Ferrante acknowledges inheriting both FTX EU’s regulatory structure and its troubled legacy.
• Backpack’s response is to redesign exchange architecture from the ground up for transparency and trust minimization.
  • [03:37] Armani Ferrante: “We wanted to not only be regulated and compliant, but also reimagine how to build this technology from first principles to solve a lot of the issues that FTX surfaced…”

Industry-Leading Daily Proof of Reserves Using Cryptography

• Backpack is pioneering daily, cryptographically verifiable proof of reserves—far surpassing industry standards (most other firms publish attestations yearly, quarterly, or monthly).
  • [04:35] Armani Ferrante: “One of the things that we recently introduced to the world was daily proof of reserves… where anybody in the world can actually verify with cryptography that their assets are indeed held in the wallets on the exchange. You don't have to trust us, you just have to trust that the math works.”
• This model aims to minimize risk and trust in centralized parties, making "don't trust, verify" a daily operational reality.

Why Don’t More Exchanges Do This?

• It’s technically and operationally demanding, requiring integration across all supported blockchains, assets, and fiat currencies, and necessitating real-time reconciliation.

  • [05:47] Armani Ferrante: “There's so much complexity involved with these exchanges. It's not just one chain, it's every chain that exists, right?... In order to get to the place where you can automate this stuff, it requires a level of rigor in the engineering that you can just cannot cut corners.”

• But, Ferrante insists, there’s “no fundamental reason” others couldn’t do it—it just requires hard work and commitment.

  • [07:12] Armani Ferrante: “We are fortunate in that respect. But… there’s no fundamental reason why every exchange couldn’t do this. It’s just hard work.”

Plans for Global Expansion

• The U.S. remains a strategic priority, despite high regulatory barriers.
• Backpack has already expanded into Dubai (with VARA licensing) and is working on Japanese licensing, with Ferrante now based there to build out operations.
  • [08:03] Armani Ferrante: “We looked at the US, we looked at Japan, and we looked at Europe, and looked at a couple of these countries with extremely high bars and rigorous requirements for going live and basically created a plan of attack.”
  • [08:55] Armani Ferrante: “We have our eyes set on Japan. We have our eyes set on the US… we’re getting pretty close to the finish line for large parts of both of them.”

Notable Quotes & Memorable Moments

• On Differentiating in a Crowded Market:

  • [01:17] “There's everything from the markets that you list, from the performance and stability of the exchange to all of the small little details that traders know and love…” — Armani Ferrante

• On the FTX Legacy and Philosophy:

  • [03:37] “We wanted to… reimagine how to build this technology from first principles to solve a lot of the issues that FTX surfaced with… any type of opaque financial system that really has plagued the world for the past hundred years, not just in crypto.” — Armani Ferrante

• On Proof of Reserves and Trust Minimization:

  • [04:35] “You don't have to trust us, you just have to trust that the math works.” — Armani Ferrante

• On Why Daily Proof of Reserves Is Rare:

  • [05:47] “It's not just spot, but also derivatives or spot margin or borrow, lending or one of the many different financial instruments that these exchanges might offer. And so in order to get to the place where you can automate this stuff, it requires a level of rigor… you just cannot cut corners.” — Armani Ferrante

Timeline of Important Segments

| Timestamp | Segment | |:---------:| ------- | | 00:00 | Opening thoughts on trust and philosophy (“brick by brick”) | | 00:42 | Introduction to Armani Ferrante and Backpack EU launch | | 01:17 | Differentiators vs Kraken, product quality, and market approach | | 02:39 | Regulatory journey under MiFID 2 | | 03:23 | Managing the FTX EU legacy, rebuilding trust, daily proof of reserves | | 05:38 | Technical and logistical aspects of daily attestations | | 07:42 | Potential for industry-wide adoption of daily proof of reserves | | 08:03 | Global expansion: plans for the US and Japan | | 10:00 | Episode wrap-up and closing remarks |

Tone and Language

The conversation is earnest, transparent, and ambitious. Ferrante speaks with the grounded optimism and determined pragmatism of a founder focused on building for the long term, with a strong emphasis on compliance, transparency, and sustainable growth. The technical discussion is detailed but accessible, aiming to inspire industry change while not downplaying the hard work required.

Conclusion

In this episode, Armani Ferrante details Backpack’s pioneering launch as a regulated derivatives exchange in Europe, the technical and regulatory rigor behind daily proof of reserves, and his vision for building trust in crypto “brick by brick.” Backpack’s expansion plans into the US and Japan, combined with its innovative transparency measures, underscore a strategy built on diligent execution, regulatory respect, and redefining trust in digital finance.