What is Delist What Happens If the Coin Is Delisted?
What is Delist What Happens If the Coin Is Delisted
An asset traded in the financial ecosystem can be removed from the public stock exchange for various reasons, that is, it is delisted. All publicly traded stocks prefer to be listed on one of the exchanges, thus being visible, as this provides the significant visibility and liquidity required for large volume trading. In other words, it is much easier for an investor to buy shares of a company that is traded on the stock exchange. However, in order to be listed on one of the prestigious systems, especially the NASDAQ or the New York Stock Exchange, it must continue to meet a number of requirements. So, what does delist mean in crypto exchanges and how does the process proceed? In this article, we will examine the meaning and effects of the concept of delist on crypto exchanges.
The answer to the question of what a delist product means in the crypto exchange is the same as in the stock exchange. The biggest example of this happened recently in 2021. After a thorough review, Binance decided to delist OST, RCN and WPR cryptocurrencies on July 16, 2021. 10 days after this decision, Cointree exchange removed the OST token from the list. The decision regarding delisted coins is valid for all token/coin transaction pairs. This is the beginning of a process that is not very complicated for investors but requires attention. How is this transaction carried out on the crypto exchange, what happens if the coin is delisted and what effect does this process have on the investor side?
Why is Delisting Done?
The questions of what it means to delist a crypto asset and how this process is carried out are usually answered by the criteria of the coin exchange where the asset is located. There are also general criteria for coins that will be delisted. It is possible to list these criteria as follows:
Coin's low transaction volume and liquidity
Lack of development support for the project (also explained as the team's commitment to the project)
Regulatory issues or security concerns that threaten investors and the stock market
Evidence of unethical/fraudulent behavior or negligence (This criteria includes lawsuits, enforcement proceedings, or other legal issues facing the Project)
Whether the asset makes a healthy and sustainable contribution to the crypto ecosystem
What Happens to Delisted Crypto Assets?
It is possible to give different and alternative answers to the questions of what happens if there is a coin delist in the crypto exchange and what the user should do in this case. If a cryptocurrency is delisted, trading for that cryptocurrency is usually stopped and users can withdraw their holdings, but the value of the cryptocurrency is often affected by the delisting process and may lose value. Additionally, the reliability and transaction volume of a delisted cryptocurrency may also decrease. For this reason, cryptocurrency market investors generally invest considering the risk of delisting and carefully select the cryptocurrencies listed on the exchanges.
The question of what happens to a delist coin is also important in terms of the investor's risk tolerance. When the cryptocurrency is delisted, the investor has different options. The first of these is to transfer the delisted coins to other exchanges where they are supported. You can create an account at the exchange you will transfer to, start withdrawing money from the previous account and transfer it to the other one by paying certain commissions. When coins are delisted, it is also a strategy to keep the money in your portfolio and wait for the relevant cryptocurrency to be listed again in the market. The question of how to withdraw a delist coin brings with it another complex process. Since these crypto pairs can no longer be found on regular exchanges, you may need an OTC market or P2P exchange brokerage to sell them. At this point, it is important to get advice from a crypto expert and financial advisor and research and devise your strategy.
The answer to the question of whether the delisted coin is relisted is theoretically "yes", but this happens very rarely. The project owner must first prevent possible bankruptcy, find a solution to the problem of why it is delist, and then comply with the regulations and standards set by the stock exchange. Cryptocurrency pairs that meet these conditions may be relisted.
What is the Impact of the Delist Process on Investors?
The delist process has short and long-term impact on investors. Once a delist is announced, the stock usually experiences an increase in volatility. Prices begin to fluctuate as investors move to reevaluate their positions. These short-term movements are a set of actions that combine speculation, uncertainty and the need to readjust investment strategies against new developments. The direction of the fluctuation is usually sharply sell-oriented. In cases of forced delisting, shareholders may experience significant financial losses while trying to urgently liquidate their investments.
When a stock goes delist, it usually moves to a less regulated market. This may cause liquidity to decrease and transaction costs to increase. A poorly performing or stagnant investment may be retained because the investor has difficulty purchasing the stock. Factors such as the company's operational health, future potential and general market conditions become critical in decisions such as buying, selling or holding shares.
