What is Cryptocurrency Delisting?

The withdrawal of a cryptocurrency (coin or token) or a trading pair from a cryptocurrency exchange is referred to as delisting. Delisting can happen willingly at the request of the project that manages the coin, for a variety of reasons including project termination. Alternatively, a more typical cause for delisting is that the coin no longer meets the exchange’s numerous listing standards.

Cryptocurrency Delisting

Criteria for Delisting

Regulatory Uncertainty

To avoid regulatory attention surrounding securities rules, cryptocurrency exchanges established and regulated in the United States are obliged to follow the standards by guaranteeing that no security coins or tokens are offered on their site. Although the SEC’s recommendations are not legally binding or enforced, cryptocurrency exchanges are taking no risks, with some exchanges known to routinely delist coins and tokens that might be classed as security tokens.

Low Volume and Liquidity

A cryptocurrency with a large trading volume has a high degree of liquidity, indicating that it is a widely traded coin. Coins with low liquidity and falling volume indicate that they have lost their attraction among users, indicating that they should be removed from the exchange. Supporting a currency or token on an exchange necessitates the use of economic resources by the exchange, and if the coin has low liquidity, it is not financially viable for the exchange to continue to support it.

Non-Adherence to Listing Requirements

Any exchange listing comes with a set of rules that the project must follow. Failure to comply with these conditions may result in the coin’s delisting. The following are some of the most important considerations to consider when considering to delist from an exchange:

  1. General team commitment to the project
  2. Activeness, quality, and level of development activity
  3. Network stability and security
  4. Degree of external communications by the team
  5. Responsiveness of due diligence requests from the exchange
  6. Cases of fraudulent or unethical instances

Security Breaches

Given the digital nature of operations, security is a major need for any enterprise, especially at this early stage of blockchain technology. It’s unsurprising that severe technical and security flaws might result in the project being delisted from an exchange. If the cryptocurrency exchange’s in-house engineers uncover a security weakness or technical uncertainty in the coin’s network – such as a 51 percent assault – steps must be taken to safeguard coin holders.

History Of Coins Getting Delisted

  • XRP was delisted on more platforms following the SEC’s Ripple complaint.
  • STEEP was delisted because the developers abandoned the project.
  • Independent Reserve, an Australian exchange, delisted bitcoin trading in January, citing Wright’s threats to sue people who post Bitcoin’s white paper as a reason.
  • MNX on the developer’s request.

Cryptocurrency delisting presents multifaceted challenges rooted in regulatory, market, and security aspects. However, with a thorough grasp of delisting criteria and by leveraging expert consultation from Kelly+Partners Accountants Burbank, businesses can adeptly maneuver through these challenges. Our seasoned team stands ready to assist in navigating the complexities of cryptocurrency finance, ensuring optimal financial operations and long-term prosperity for your business.