<figure class="wp-block-image size-large"><img width="325px" height="183px" srcSet="https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2026/03/03115735/News-Backpacks-Token-to-Equity-Model-Seeks-to-Sidestep-Securities-Regulations-375x212.webp 375w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2026/03/03115735/News-Backpacks-Token-to-Equity-Model-Seeks-to-Sidestep-Securities-Regulations-662x374.webp 662w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2026/03/03115735/News-Backpacks-Token-to-Equity-Model-Seeks-to-Sidestep-Securities-Regulations.webp 686w" sizes="(max-width: 425px) 150px, 450px" src="https://ll-blog-dev.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2026/03/03115735/News-Backpacks-Token-to-Equity-Model-Seeks-to-Sidestep-Securities-Regulations-662x374.webp" alt="" class="wp-image-9449"/></figure>


Backpack has a new plan. The crypto exchange wants to turn tokens into equity. But it&#x27;s trying to dodge securities law first.
The exchange was co-founded by Can Sun. He&#x27;s the former FTX general counsel. Now he&#x27;s pitching a token-to-equity conversion program built around VIP status.
The company&#x27;s exploring a $50 million raise. Valuation: $1 billion. It&#x27;s also considering going public.
Here&#x27;s the trick. Just holding Backpack&#x27;s token won&#x27;t give you equity. Trading it won&#x27;t either.
You need to qualify as a VIP first. That means actively using the exchange. It means locking your tokens for about a year. Only then can you convert to equity.
Sun says this structure matters. Equity rights come from the VIP program. They don&#x27;t come from the token itself.
&quot;Equity rights are attributes of the off-chain VIP program, not of the token itself, so the token in open circulation doesn&#x27;t by itself represent a security,&quot; <a href="https://decrypt.co/359510/legal-strategy-behind-crypto-exchange-backpack-token-equity-program" target="_blank" rel="noopener">Sun explained.</a>
That distinction is crucial. U.S. securities law has been hammering tokens that function as investment contracts. Backpack&#x27;s trying to build separation.
The timing matters too. Backpack&#x27;s weighing a traditional IPO or SPAC merger. Token unlocks will align with that timeline.
Sun says the company&#x27;s gotten strong interest. Investment bankers want in. SPAC sponsors are circling. But Backpack&#x27;s coordinating everything carefully: corporate financing, token economics, regulatory positioning.
There&#x27;s a backup plan. Backpack&#x27;s ready to register the tokens as securities if needed. The plan connects to a future IPO.
They&#x27;d list an additional securities class at IPO. It would cover token-related rights. Sun says this would cure &quot;any worst-case regulatory finding that the initial token program was an unregistered securities sale.&quot;
U.S. securities law allows this. Companies can remedy earlier unregistered offerings through later registration.
The strategy sounds familiar. Coinbase proposed &quot;Class T&quot; tokenized stock back in 2020. The SEC scrutinized it. It never launched.
But Backpack&#x27;s approach is different. The VIP structure adds layers. It separates token holding from equity rights more than simple tokenized equity schemes did.
It might work. The model could become a template for other crypto companies. They want tokenized ownership without immediate securities regulations.
The emphasis is key. Active platform usage matters. Time-locked commitments matter. Passive token holding doesn&#x27;t get you equity.
It&#x27;s a potential path forward. Crypto firms are increasingly moving toward public markets. They&#x27;re pursuing formal regulatory compliance.
Regulators will decide. Their interpretation will determine everything. This becomes either a viable standard or another cautionary tale in crypto&#x27;s regulatory maze.

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<figure class="wp-block-image size-large"><img width="325px" height="183px" srcset="https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2026/03/03115735/News-Backpacks-Token-to-Equity-Model-Seeks-to-Sidestep-Securities-Regulations-375x212.webp 375w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2026/03/03115735/News-Backpacks-Token-to-Equity-Model-Seeks-to-Sidestep-Securities-Regulations-662x374.webp 662w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2026/03/03115735/News-Backpacks-Token-to-Equity-Model-Seeks-to-Sidestep-Securities-Regulations.webp 686w" sizes="(max-width: 425px) 150px, 450px" src="https://ll-blog-dev.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2026/03/03115735/News-Backpacks-Token-to-Equity-Model-Seeks-to-Sidestep-Securities-Regulations-662x374.webp" alt="" class="wp-image-9449"/></figure>


Backpack has a new plan. The crypto exchange wants to turn tokens into equity. But it's trying to dodge securities law first.
The exchange was co-founded by Can Sun. He's the former FTX general counsel. Now he's pitching a token-to-equity conversion program built around VIP status.
The company's exploring a $50 million raise. Valuation: $1 billion. It's also considering going public.
Here's the trick. Just holding Backpack's token won't give you equity. Trading it won't either.
You need to qualify as a VIP first. That means actively using the exchange. It means locking your tokens for about a year. Only then can you convert to equity.
Sun says this structure matters. Equity rights come from the VIP program. They don't come from the token itself.
"Equity rights are attributes of the off-chain VIP program, not of the token itself, so the token in open circulation doesn't by itself represent a security," <a href="https://decrypt.co/359510/legal-strategy-behind-crypto-exchange-backpack-token-equity-program" target="_blank" rel="noopener">Sun explained.</a>
That distinction is crucial. U.S. securities law has been hammering tokens that function as investment contracts. Backpack's trying to build separation.
The timing matters too. Backpack's weighing a traditional IPO or SPAC merger. Token unlocks will align with that timeline.
Sun says the company's gotten strong interest. Investment bankers want in. SPAC sponsors are circling. But Backpack's coordinating everything carefully: corporate financing, token economics, regulatory positioning.
There's a backup plan. Backpack's ready to register the tokens as securities if needed. The plan connects to a future IPO.
They'd list an additional securities class at IPO. It would cover token-related rights. Sun says this would cure "any worst-case regulatory finding that the initial token program was an unregistered securities sale."
U.S. securities law allows this. Companies can remedy earlier unregistered offerings through later registration.
The strategy sounds familiar. Coinbase proposed "Class T" tokenized stock back in 2020. The SEC scrutinized it. It never launched.
But Backpack's approach is different. The VIP structure adds layers. It separates token holding from equity rights more than simple tokenized equity schemes did.
It might work. The model could become a template for other crypto companies. They want tokenized ownership without immediate securities regulations.
The emphasis is key. Active platform usage matters. Time-locked commitments matter. Passive token holding doesn't get you equity.
It's a potential path forward. Crypto firms are increasingly moving toward public markets. They're pursuing formal regulatory compliance.
Regulators will decide. Their interpretation will determine everything. This becomes either a viable standard or another cautionary tale in crypto's regulatory maze.

Backpack's Token-to-Equity Model Seeks to Sidestep Securities Regulations

Backpack exchange proposes VIP-based token-to-equity conversion to avoid securities law. Co-founder Can Sun explains how the structure separates tokens from equity.