Crypto exchanges need to figure out a transparent process for delisting coins

Watching the Bitcoin Satoshi Vision (SV) delisting drama play out last week was interesting theatrics. The controversial cryptocurrency came under renewed scrutiny after one of its promoters, Craig Wright, began threatening legal action on people who rebuked his claims of being the true Satoshi Nakamoto. But it also served as a reminder of the ever-present chasm between traditional equities exchanges and their crypto counterparts. 

As a former staffer at the Nasdaq Stock Market, I remember ad nauseam the standards and requirements for listing and delisting stocks. In crypto however, virtually no standards exist, and if they do, they aren't transparent. As we saw last week, Kraken delisted Bitcoin SV following the release of a twitter poll, effectively illustrating that it's figuring out the delisting process as they went.

"In this case, it is a unique case for us. We haven't delisted any other coins because the founders, people promoting it turned out to be assholes," Kraken CEO Jesse Powell told me during a phone interview. "Hopefully we don't see any more of these cases," he added. But Powell's discussion of the firm's delisting process raises more questions than it answers. "I guess it could happen again if public sentiment turns against a given token," he said. To be sure, I am not picking on Kraken. I applaud that Powell took the time to outline his thinking candidly over the phone.

At the same time, Binance shed some light on its own decision to delist Bitcoin SV in a blog post. "When we conduct these reviews, we consider a variety of factors," the firm said, citing variables such as "smart contract stability" and "level of public communication."

Still, delisting at this point looks like virgin territory. Indeed, the lack of clarity around the listing and delisting process reflects the uncertainty that plagues crypto capital markets. 

Things at Nasdaq work rather differently. Companies know they must maintain a certain level of trading and quarterly disclosures to keep their stock listed. They also have to pay their annual listing fees, which are clearly outlined on the firm's websites. Firms that don't have at least $1.1 million of shares in outstanding trading face delisting. Furthermore, at the end of the trading day, Nasdaq publishes a list of "non-compliant" firms that are not meeting their listing standards. Most of these standards are self-policed by exchanges and have developed over decades. Still, they've helped U.S. equities become the most liquid, actively trading markets in the world.

Crypto markets should take note. If big investors are going to take this market seriously, then they are going to have to do the hard work. And much of that hard work lies in the weeds and the pedantic things like having set, well-defined listing and delisting standards.