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Exchange Platforms Are Battling Against The Lack Of Liquidity And Regulatory Control

The bearish market that engulfed the crypto world during 2018 and Q1 of 2019 forced crypto investors to reconsider their approach of investing. The whole industry flourished during the ICO trend in 2017, but after the bears stepped in, investors`enthusiasm vanished.

The bearish market was a catalyst for the bankruptcy of different platforms and coin issuers with less competitiveness over others. Those projects proved to be less sustainable in the long run, and they were expected to fail sooner or later. This was perceived by crypto exchanges as a sign of having to “purge” some of the projects and have them removed from their platforms. IDEX for example, delisted 27 tokens on 14th June 2018 as part of their “clean-up” process.

The delisting also reached the top-ten cryptocurrencies. The controversial Bitcoin SV project is a one of the most prominent examples. The self-proclaimed creator of Bitcoin, Craig Wright, lost several lawsuits against high-profile industry players within a period of several months. The list includes Ethereum’s creator Vitalik Buterin, crypto podcaster Peter McCormack, and the man behind the crypto-related Twitter account @HodlNaut.

Wright, who claims to be Satoshi Nakamoto, also got involved in the Bitcoin Cash hard fork. There was a major dispute between Bitcoin ABC group and Wright in terms of computing power. Both parties tried to incorporate software updates to the Bitcoin Cash Protocol, resulting in Wright`s code creating a brand new currency – the Bitcoin SV.   

Despite the initial hype around the new coin, the lawsuits were the main reason for two of the biggest crypto exchanges Binance and Kraken to delist the currency. Binance’s CEO Changpeng Zhao even tweeted about the delisting, stating that he has had “Enough of this sh*t! Craig Wright is not Satoshi Nakamoto”. Kraken made a poll among its user base only to realize that users call Bitcoin SV “toxic.”

Regulatory pressures also tightened the rope around non-sustainable crypto projects. Crypto exchanges tended and continue to stick to regulatory requirements, thus – dropping assets from their platforms. In the United States, regulatory pressure made Poloniex to axe nine trading pairs due to concerns about assets being recognized as securities. Bittrex blocked access for U.S.-based customers for 21 assets. “Some markets will be unreachable for clients in the United States,” Bittrex stated.

South Korea, known for its crypto-friendly regulations, also took the route of compliance with regulating bodies` policies. Privacy-oriented crypto projects like Monero (XMR) were dropped from OKEx’s listing after FATF posting new guidelines for customer identity and crypto transactions. OKEx also ditched support for Dash, Super Bitcoin, Zcash, and Horizen.

Lack of liquidity is also a problem for exchanges. Binance, for example, announced on 30th September that the company is delisting thirty trading pairs. Six of the crypto projects were released on Binance’s own Launchpad platform. Poloniex also got rid of 23 crypto projects due to a lack of liquidity.

Crypto projects rely solely on listing through various exchanges to get cash flow and liquidity. After a coin is being delisted, the currency usually suffers a hit in price due to lowered trading volumes. Bitcoin SV advocate Jimmy Nguyen admitted that the axing was “a dramatic time for the currency, but nowadays the currency trades at a higher price than it was before the major delisting.” Nguyen added that the price increase is due to Bitcoin SV’s added value, which was gained organically.

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