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Glossary

Delisting

November 21, 2023 - Around 4 mins mins to read

Delisting is a process that involves removing a project or asset from an exchange’s listing standards. This action prevents the asset from being bought or sold on the exchange. Delisting can occur for various reasons, and it can have significant implications for both the project and investors.

Why are there reasons for delisting?

There are several factors that can lead to a project being delisted from an exchange:

  • Lack of regular trading activity: If a project has low trading volumes or a lack of interest from investors, the exchange may choose to delist it.
  • Absence of protocol development: If a project fails to make progress or demonstrate active development, it may be delisted.
  • Faulty network or smart contract reliability: Projects that have technical issues, such as unreliable networks or smart contracts, may be delisted to protect investors.
  • Non-existent business-to-customer interaction: If a project lacks engagement with its user base or fails to provide meaningful interactions, it may face delisting.
  • Proof of fraudulent or dangerous activity: If a project is involved in fraudulent or malicious activities, it may be delisted to protect the exchange and its users.

It’s important to note that delisting is usually a permanent action, although there may be exceptional circumstances where a project’s asset is relisted. In some cases, a project may voluntarily delist if it is purchased or becomes a private entity. On the other hand, if a project fails to meet the listing standards set by exchanges, it may be involuntarily delisted.

What are the prerequisites for listing?

Exchanges have specific listing prerequisites that projects must meet to be listed and remain listed. These prerequisites may vary from exchange to exchange, but they generally include criteria such as:

  • Prompt filing of financial statements: Projects need to regularly provide accurate financial information to ensure transparency and accountability.
  • Share price above a certain threshold: There is often a minimum share price requirement to maintain listing status.
  • Reasonable level of shareholders: Exchanges may require a minimum number of shareholders to ensure sufficient market participation.
  • Minimum market capitalization: Projects are expected to maintain a certain market value to remain listed.
  • Specific revenue, profit, cash flow, and trading activity requirements: Exchanges may set financial benchmarks to assess the project’s performance and viability.

Meeting these listing prerequisites can be complex and may vary depending on the exchange and the type of asset being listed. It’s crucial for projects to understand and adhere to these requirements to avoid potential delisting.

What are the implications of delisting?

Delisting can have significant implications for both the project and investors. When a project is delisted, it becomes harder for investors to explore and purchase shares or tokens associated with the project. The project loses the ability to offer new shares or tokens to the market, limiting its ability to raise funds for future business ventures.

There are several potential reasons for delisting a stock, including impending bankruptcy, failure to complete obligatory reports, or share values falling below the exchange’s minimum threshold. However, a business can request to have its shares relisted once it resolves the issue and meets the listing criteria. It’s important to note that relisting a firm during its second term on the market may be met with limited success and conflicting feelings from investors.

Delisting also serves an important role in protecting markets from substandard securities and issuers nearing the end of their life cycle. Exchanges play a crucial role in decreasing systemic risk and safeguarding investors by enforcing rigorous administrative requirements for all issuers.

Why is Crypto Delisting happening?

In the world of cryptocurrencies, delisting refers to the removal of a token or coin and its trading pairs from a cryptocurrency exchange. When a project is delisted, investors who have already invested in the delisted project are usually given a specific time frame to withdraw their funds before the crypto project becomes unavailable on the exchange.

An example of a recent delisting occurred on July 7, 2021, when Binance, the world’s largest cryptocurrency exchange, delisted the OST, RCN, and WPR projects after conducting a thorough review. Binance delists projects that violate one or more rules, including lack of commitment to the project, low trading volume, weak network security, evidence of fraudulent activity, and other parameters considered by the Binance team when making delisting decisions.

What is the conclusion?

Delisting is the process of removing a project or asset from an exchange’s listing standards. It can occur for various reasons and has significant implications for both the project and investors. Compliance with the listing prerequisites set by exchanges is essential to avoid delisting. Delisting serves a crucial role in protecting markets and investors by enforcing standards and mitigating risks associated with substandard projects.

Author

Coincu

Glossary

Delisting

Delisting is a process that involves removing a project or asset from an exchange’s listing standards. This action prevents the asset from being bought or sold on the exchange. Delisting can occur for various reasons, and it can have significant implications for both the project and investors.

Why are there reasons for delisting?

There are several factors that can lead to a project being delisted from an exchange:

  • Lack of regular trading activity: If a project has low trading volumes or a lack of interest from investors, the exchange may choose to delist it.
  • Absence of protocol development: If a project fails to make progress or demonstrate active development, it may be delisted.
  • Faulty network or smart contract reliability: Projects that have technical issues, such as unreliable networks or smart contracts, may be delisted to protect investors.
  • Non-existent business-to-customer interaction: If a project lacks engagement with its user base or fails to provide meaningful interactions, it may face delisting.
  • Proof of fraudulent or dangerous activity: If a project is involved in fraudulent or malicious activities, it may be delisted to protect the exchange and its users.

It’s important to note that delisting is usually a permanent action, although there may be exceptional circumstances where a project’s asset is relisted. In some cases, a project may voluntarily delist if it is purchased or becomes a private entity. On the other hand, if a project fails to meet the listing standards set by exchanges, it may be involuntarily delisted.

What are the prerequisites for listing?

Exchanges have specific listing prerequisites that projects must meet to be listed and remain listed. These prerequisites may vary from exchange to exchange, but they generally include criteria such as:

  • Prompt filing of financial statements: Projects need to regularly provide accurate financial information to ensure transparency and accountability.
  • Share price above a certain threshold: There is often a minimum share price requirement to maintain listing status.
  • Reasonable level of shareholders: Exchanges may require a minimum number of shareholders to ensure sufficient market participation.
  • Minimum market capitalization: Projects are expected to maintain a certain market value to remain listed.
  • Specific revenue, profit, cash flow, and trading activity requirements: Exchanges may set financial benchmarks to assess the project’s performance and viability.

Meeting these listing prerequisites can be complex and may vary depending on the exchange and the type of asset being listed. It’s crucial for projects to understand and adhere to these requirements to avoid potential delisting.

What are the implications of delisting?

Delisting can have significant implications for both the project and investors. When a project is delisted, it becomes harder for investors to explore and purchase shares or tokens associated with the project. The project loses the ability to offer new shares or tokens to the market, limiting its ability to raise funds for future business ventures.

There are several potential reasons for delisting a stock, including impending bankruptcy, failure to complete obligatory reports, or share values falling below the exchange’s minimum threshold. However, a business can request to have its shares relisted once it resolves the issue and meets the listing criteria. It’s important to note that relisting a firm during its second term on the market may be met with limited success and conflicting feelings from investors.

Delisting also serves an important role in protecting markets from substandard securities and issuers nearing the end of their life cycle. Exchanges play a crucial role in decreasing systemic risk and safeguarding investors by enforcing rigorous administrative requirements for all issuers.

Why is Crypto Delisting happening?

In the world of cryptocurrencies, delisting refers to the removal of a token or coin and its trading pairs from a cryptocurrency exchange. When a project is delisted, investors who have already invested in the delisted project are usually given a specific time frame to withdraw their funds before the crypto project becomes unavailable on the exchange.

An example of a recent delisting occurred on July 7, 2021, when Binance, the world’s largest cryptocurrency exchange, delisted the OST, RCN, and WPR projects after conducting a thorough review. Binance delists projects that violate one or more rules, including lack of commitment to the project, low trading volume, weak network security, evidence of fraudulent activity, and other parameters considered by the Binance team when making delisting decisions.

What is the conclusion?

Delisting is the process of removing a project or asset from an exchange’s listing standards. It can occur for various reasons and has significant implications for both the project and investors. Compliance with the listing prerequisites set by exchanges is essential to avoid delisting. Delisting serves a crucial role in protecting markets and investors by enforcing standards and mitigating risks associated with substandard projects.

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