It looks like the crypto market is going through the second stage of seasonal house cleaning. But is this a good thing?

It all started during the post-ICO stage when exchanges finally started delisting all the shaky tokens that had flooded the market. The majority of scam or just plain useless coins couldn’t keep up with solid projects and they basically removed themselves from the picture.

So what’s happening now?

Token Delisting: BSV

You all probably heard the recent news about Kraken, who organized a poll seeking the conventional wisdom of its community. The question was whether the exchange should follow the new trend and delist the infamous BSV token. The community’s decision was pretty straightforward – more than 70,000 users voted against ‘the Real Bitcoin’ which resulted in coin removal.

The situation with BSV is a curious one. In case you’re in the dark about it, here’s a brief version of events.

BSV came out as a result of the BCH fork in mid-November, 2018. However, right from the start, the future didn’t look bright for BSV. And the behavior of its inspirational leader, Craig Wright, has not helped either. Dr. Wright claimed he was the real Satoshi Nakamoto and BSV was the only real Bitcoin. Known for his eccentric behaviour, he started banning everyone who had any doubts about him or his views and finally filed a lawsuit against a couple of non-believers. He even submitted some shady pieces of evidence which were quickly exposed by a Reddit user. (Oh and by the way, this Reddit user has a whole series of investigations on Dr. Wright). Overall, an ugly situation, to say the least.

The persona of fake Satoshi is clearly not the most likable one, which obviously cannot help but effect the product he promotes. At some point, the Bitcoin community had enough and Binance’s CEO made a decision to delete the token from the exchange. Shortly after that, ShapeShift followed their lead. Kraken, in turn, handled this more elegantly and explained delisting by listening to its community and creating a better world. On their blog post, the exchange team was very clear about their negative feelings towards BSV and the people behind it and concluded it with the following:

A secure, sustainable and trustworthy ecosystem is only possible if community members live by these values. Crypto’s future is bright. There is no room for bad actors.’

Public opinions divided. Some said it was not exactly tolerant to delist a token even if its leader is acting like a lunatic. People argued that a move like that is taking us back to the centralized model where exchanges act as authorities and decide who is good enough to deserve a place in the trades.

On the other hand, exchanges are private entities that conduct their business off the chain. This means that they are actually free to do what they feel is best for them. And let’s be honest, if the majority of the exchange users are clearly not interested in the coin, delisting it wouldn’t make much of a difference in the long run.

BSV’s case is not the first one. The list of delisted coins is quite long and, as a matter of fact, they are usually ICO-related. Low liquidity gives no quarter and exchanges are deleting weak players relentlessly. Some platforms went even further and set up strict delisting guidelines.

These measures are actually more of a positive sign. The crypto market is maturing and showing it can handle the situation independently, without the involvement of regulators.

Exchange Shutdowns

But those are not only wasteful tokens that had it coming. In March, yet another crypto exchange closed its digital doors. Gatecoin, a Hong Kong-based company, is about to face liquidation due to the loss of funds, but is shifting the blame to its payment provider. Whoever’s fault it is, the result is inevitable: if you fail to deliver, prepare to face the music.

Earlier this year, as many as four exchanges were shut down. Among the unlucky four were Cryptopia, Liqui, CoinPulse, and QuadrigaCX. The reasons for failure are pretty much the same from hacker’s attacks and stolen funds to low liquidity and other letdowns.

However, Quadriga has managed to stand out. The Canadian exchange’s co-founder, Gerald Cotton, passed away and the private key for $190 million worth of crypto, apparently, went into oblivion together with its owner. The whole situation looks extremely suspicious, but that’s a whole different story.

Nevertheless, fraudulent crypto schemes have fewer chances to succeed nowadays as both regulation institutions and the communities are way more experienced and cautious.

Now, with the general decline of ICO-powered projects, smaller exchanges have suffered a serious loss of revenue with all the sham tokens leaving the market. Big exchanges, like Binance or Coinbase, in turn, are increasing their volumes and swallowing up smaller businesses.

The Bottom Line

Ideally, the crypto market should become more self-adapting and we already see its first attempts at doing so. Major exchanges delisting uneligible tokens, poorly performing exchanges going bankrupt, and the communities working together and contributing to overall welfare – these are the signs of a maturing, self-regulating ecosystem. The next reasonable step would be to establish a trustworthy self-regulatory market model.  

Follow Lumi Wallet on Twitter, Facebook, Telegram or Reddit for more crypto knowledge and news!