What Is Delisting

Delisting is a term that describes the action and process of removing a stock, cryptocurrency, or digital asset from trading on an exchange. When a cryptocurrency is delisted, it is removed from the exchange so that traders can no longer trade the cryptocurrency in any form. All of its pairs are removed, and investors with the cryptocurrency in their portfolio are instructed to remove them within a timeframe. Once that period elapses, traders no longer have access to the cryptocurrency.

Delisting can happen at the prompting of the exchange or following a request from the project team or owners. Delisting a currency is a simple process, but it typically involves a public announcement and instructions for traders.

What does delisted mean in terms of trading? A delisted cryptocurrency doesn't mean it has failed or the project is dead. Some cryptocurrencies are delisted from major exchanges but still remain listed and actively traded in smaller exchanges. When a cryptocurrency is delisted on an exchange, the traders having it in their portfolio may have up to a few days to convert the token into other assets, or it may be force-converted for them.

In recent years, some exchanges such as Kraken and eToro have shown delisting meaning, having Cardano delisted and even Monero, the privacy token, delisted.

Reasons Why Cryptocurrencies are Delisted

There are five main reasons why an exchange may delist a cryptocurrency:

Lack of liquidity: Liquidity is crucial for any asset, including cryptocurrencies. If there is no demand for a particular cryptocurrency, it can become illiquid, meaning there are not enough buyers or sellers to facilitate trades. When a cryptocurrency becomes illiquid, exchanges may delist it to avoid potential losses.

Security concerns: Cryptocurrencies are vulnerable to hacking and other security breaches, compromising their value and leading to investor losses. If an exchange deems a particular cryptocurrency insecure, it may delist it to protect its users.

Legal issues: Cryptocurrencies operate in a regulatory gray area in many jurisdictions, and they can face legal challenges related to their use and ownership. If a cryptocurrency is deemed to violate laws or regulations, it may be delisted from exchanges.

Lack of development: Cryptocurrencies that are not regularly updated or improved may become obsolete, reducing their value and making them less attractive to investors.

Market manipulation: Cryptocurrencies are susceptible to market manipulation, which can lead to artificially inflated prices or significant price drops. If an exchange detects evidence of market manipulation, it may delist the cryptocurrency to protect its users.

Scams and fraud: Cryptocurrencies have been associated with scams and fraud, such as Ponzi schemes and fake initial coin offerings (ICOs). If a cryptocurrency is deemed fraudulent, it may be delisted from exchanges to protect investors.

What does delist mean? A cryptocurrency designated delisted, meaning all trading activities on that exchange ends for the cryptocurrency and associated pairs. Traders no longer have access to it on that exchange.

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