Delisting

What is Delisting?

Delisting a cryptocurrency asset is the process of suspending all trading activity of the token pairs on an exchange platform. Delisting a token includes all the removal of all the applicable spot and margin trading pairs associated with it.

When a token is delisted, all its trading pairs are removed from the exchange to prevent continuous activities on it. Because some users of an exchange might still be holding a delisted token, they are given a specified period to withdraw or swap the tokens, after which the asset is no longer supported.

Some Common Reasons for Delisting

An exchange reserves the right to delist any cryptocurrency that no longer meets the criteria for listing tokens for public trading. Some of the reasons for delisting an asset are as follows:

1. Low Trading Volume and Liquidity: Cryptocurrency assets with low trading activity may be unprofitable for the exchange to support. The lower the trading activities, the lower the volume traded on the token pairs. This also gives rise to illiquid assets that are not easily tradable and are at risk of price manipulation.
2. Regulatory Factors: Cryptocurrency exchanges, like Paybis, ensure the assets tradable on their platform remain compliant with regulatory requirements. If a particular cryptocurrency asset faces regulatory audits and is found non-compliant by local or international regulatory bodies, an exchange might delist it.
3. Market Manipulation: Assets suspected of being involved in actions regarded as fraudulent activities such as pump-and-dump, market manipulation and insider trading can be removed from an exchange.

What Happens After a Token is Delisted?

Before a token is delisted on an exchange, users are given weeks to months to decide what to do with their assets. During this period, the following are practical steps to take:

• A user can withdraw the cryptocurrency to an external wallet on platforms where trading activity is active. This exchange can be a centralized or a decentralized exchange that supports the token.
• A user can sell the coins on an over-the-counter (OTC) market deal or through peer-to-peer exchange. (This option may involve selling at a discounted price)
• Users can hold the token till another exchange relists it. This is a risky option as there is no guarantee that it will happen.

What Happens if a User Does Not Withdraw or Sell a Delisted Token?

If a user does not sell or withdraw a delisted cryptocurrency, the following are the most common options used by popular exchanges:

1. Conversion to Stablecoin: An exchange can automatically convert the delisted token to a stablecoin directly in your wallet balance.
2. Asset Forfeiture: An exchange can confiscate the tokens and the users will have no rights to reclaim the funds.

An Example of Token Delisting

A typical example of delisting from Paybis was in September 2023 when an announcement of the delisting of the Binance USD token (BUSD) was made. The reason for delisting BUSD from the Paybis exchange was that Binance was bringing the token to a halt.

By ceasing the minting, issuance and maintenance of the fiat reserve for BUSD by Binance, the token will no longer be supported by the organization. This means there will no longer be a reserve that backs the stability of the coin to the United States Dollar.

The development ensured that all Paybis users’ balances were not affected as the token was not removed immediately but that new transactions were no longer supported.

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