Alongside the resurgence of crypto, enthusiasts have also noticed something else happening in the market. The number of delisted coins has gone up significantly in the past year. According to Bloomberg and Kaiko, exchanges have collectively delisted over 3000 coins in the past year alone, which is very concerning for investors. With so many delisted coins, anyone interested in crypto should ask why this is happening and what they can do to protect themselves.
Why Cryptocurrencies Get Delisted
It is vital to understand that each crypto exchange has rules that govern what coins and tokens it can have on its platform. These rules vary slightly from one exchange to the next, but there is a lot of overlap about why they can and do delist cryptocurrencies.
Low Trade Volumes and Legal Issues
The first reason is related to something many people interested in cryptocurrencies know about; reduced trade volumes tied to bankruptcies and scandals. Coins with low trade volumes and little interest can become expensive and inefficient to maintain. An exchange might decide to delist them to save money or make resources available for others that are performing better.
Despite the growing number of coins, a loss of trust in the system occasioned by scams, including rug pull incidents and bankruptcies like the FTX incident, has led to much lower trading volumes. This issue is also tied to regulatory and legal concerns.
If the founders of a coin are involved in anything that might become a legal nuisance for an exchange, they would rather delist the coin than deal with that issue.
Security and Development Issues
With different programming languages allowing people to do so, almost anyone can create a cryptocurrency. However, that does not mean it will be good or secure. Exchanges do not want to deal with coins or tokens with significant security issues since they pose risks to them and their users. Delisting helps protect everyone.
A coin or token might also face development issues where it stagnates without development or activity for a long time. For this reason, exchanges and users might no longer see it as usable or bible, and the exchange might delist it to maintain the relevance and quality of its platform.
Recovering Delisted Coins
While it may seem like all is lost, it is possible to recover your delisted coins. The best way to do so is by contacting the exchange and asking them to do it for you or help you do it. However, almost all exchanges will notify you before delisting any assets you have invested in, so check your emails and their website often to ensure you do not miss delisting announcements and the withdrawal period and have to go through the recovery process.
Crypto enthusiasts want the projects they are involved or invested in to succeed, but they do not always do so. A crypto exchange might delist a token or coin you have invested in for different reasons, and it is up to you to know when and if this is happening. You can also recover delisted coins, but the process is painful, and you should avoid it if you can.
