What is Delisting?

In the realm of dynamic financial markets, delisting is a significant event that occurs when a project fails to meet the strict listing standards of an exchange. This article aims to explain the concept of delisting, provide an overview of its implications, and the factors that contribute to this significant decision.

Get to know what delisting is

Delisting occurs when a project is no longer in line with the listing standards of a particular exchange. Some reasons that can cause delisting include:

1. Lack of regular trading activity

Projects that experience a decline in trading volume may be at risk of delisting.

2. There is no protocol development

Bursa expects the project to continue to develop and innovate; a stagnant or undeveloped protocol could trigger delisting.

3. Damaged network or reliability of smart contracts

Reliability issues in a project's network or smart contracts can also undermine investor confidence and trigger delisting.

4. Non-existent business-to-customer interaction

Projects that fail to engage with their user base may face the risk of delisting as exchanges prioritize active, customer-oriented ventures.

5. Evidence of fraudulent or malicious activity

Indications of fraudulent or malicious activity may result in delisting to protect investors.

It is important to note that delisting is generally permanent, although extraordinary circumstances may result in the relisting of project assets.

Impact of Delisting

Delisting can be voluntary or involuntary. If a business is purchased or goes private, delisting can occur voluntarily.

Conversely, failure to meet listing standards results in involuntary delisting. These standards can be complex, ranging from financial reporting requirements to specific market capitalization thresholds.

The impact of delisting is very significant. Shares of delisted companies become more difficult for investors to access and buy.

These restrictions limit the company's ability to offer new shares to the market to fund new projects, potentially affecting its growth path.

Delisting Scenarios in Crypto

In the crypto world, when a token or coin is delisted, all trading pairs associated with it are removed from that crypto exchange.

Typically, investors in delisted projects are given a certain time period to withdraw their funds. Once that period ends, the crypto project will no longer be accessible in any form on that crypto exchange.

An interesting example occurred on July 7, 2021, where the world's largest crypto exchange, Binance, delisted the OST, RCN, and WPR projects after conducting a thorough review.

Binance's criteria for delisting involve factors such as lack of involvement on the project, low trading volume, compromised network security, and evidence of fraudulent activity.

Conclusion

It is important to comply with the trading platform rules to avoid the impact of delisting. These rules aim to maintain market integrity, protect investors, and ensure that only projects committed to quality and compliance thrive in the competitive financial landscape.

As a market participant, understanding the dynamics of delisting can give you the confidence to anticipate anything in navigating the ever-evolving financial landscape.

Also read:

What is Curve Finance (CRV)? Automated Market Maker Protocol

What is Asset Financing and Its Role in the Crypto Industry

What is the Financial Crisis and its Relationship to Bitcoin

DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.