Is Backpack Exchange Safe? (2025 Security Review)

What is Backpack Exchange?

Backpack Exchange is a Singapore-based cryptocurrency platform launched in 2022. The company operates as both an exchange and crypto wallet, primarily focused on the Solana blockchain and Solana xNFTs.

What security features does Backpack Exchange have?

Let's walk through some of Backpack Exchange's security features:

• Cold storage: Backpack stores the majority of user funds offline in cold storage, which protects cryptocurrency from online attacks. 
• Two-factor authentication (2FA): Users can enable two-factor authentication through the authenticator app of their choice. 
• Hardware wallet integration: Users can connect hardware wallets directly to their Backpack accounts for additional cold storage protection. 
• NFT locking feature: Backpack provides NFT collection locking to prevent unauthorized transfers, protecting users' digital collectibles. 

Has Backpack Exchange ever been hacked?

No, Backpack Exchange has no known security breaches or hacks since launching in 2022. The platform has maintained a clean security record, though as a newer exchange, its track record is shorter compared to platforms like Coinbase and Kraken. 

Is Backpack Exchange FDIC insured?

Crypto on Backpack Exchange is not FDIC insured. Generally, cryptocurrency is not subject to FDIC protection.

What legal and regulatory issues has Backpack Exchange faced?

As a relatively new exchange, Backpack has not faced a major legal or regulatory issue.

In the United States, Backpack expanded to 11 states in February 2024, including California and Colorado. It’s expected to expand to more states in 2025. 

Is Backpack Exchange legal in the U.S.?

Backpack Exchange is currently only available in 11 US states, but it’s expected to expand to more in the future. 

Why should I use Backpack Exchange?

Backpack Exchange is a great choice if you want an integrated wallet with exchange services. It’s perfect for users involved in the Solana ecosystem and interested in xNFTs. 

What are the risks of using Backpack Exchange?

Here are the main risks of using Backpack Exchange:

• Limited track record: As a newer exchange launched in 2022, Backpack has less of an operational history compared to established platforms. 
• Account-level threats: Like with all cryptocurrency platforms, it’s important to be cautious of account-level threats on Backpack. This includes phishing and malware. 

Protect yourself by enabling two-factor authentication and by securing your holdings with a hardware wallet. 

Does Backpack Exchange report to the IRS?

Yes, Backpack Exchange follows Know Your Customer (KYC) requirements and collects user identification information. Starting in 2026, crypto exchanges operating in the States must issue Form 1099-DA to report digital asset transactions to the IRS.

Remember that you're required to report all crypto income and capital gains on your tax return, regardless of whether you receive a tax form. Crypto tax software like CoinLedger can automatically track your trades from Backpack and other exchanges and generate a complete crypto tax report in minutes. 

Conclusion

Backpack Exchange offers strong security features like cold storage, two-factor authentication, and hardware wallet integrations. While Backpack is a newer exchange with a limited operational history, it remains a solid option for traders interested in Solana ecosystem integration and innovative wallet-exchange functionality.