Cryptocurrency trading platforms typically have listing standards for crypto projects. Before listing any crypto asset, most trading platforms conduct due diligence to assess if it meets their standard.
It’s the same for Binance, one of the world’s largest cryptocurrency exchanges.
Binance maintains a high standard when listing digital assets. The exchange does not list crypto projects on its marketplace without reviewing them to ensure it meets its standards.
In a recent announcement, Binance said it would delist two crypto assets, Helium (HNT) and Tael (WABI), from its platform.
The cryptocurrency exchange explained how it reviews the crypto assets listed on its marketplace, including the criteria it follows when adding assets.
According to Binance, it delists projects that no longer meet its standard and whose visions do not align with industry changes.
About Binance Exchange
Binance is a leading online cryptocurrency exchange platform where users can trade hundreds of cryptocurrencies.
Binance started in Hong Kong in 2017, offering crypto-to-crypto trade with over 360 cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Dogecoin, Litecoin (LTC), and its BNB.
Binance has an electronic wallet where traders can store their asset holdings and also offers services that allow users to earn interest while transacting with cryptocurrencies.
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Binance’s Criteria for Listing Crypto Projects
In a recent press release, Binance noted that it conducts periodic reviews on digital assets listed on its platforms to ensure they still meet its high standard.
Here are the factors Binance considers when reviewing crypto projects listed on its platform.
- Level and Quality of Development Activity
People often grade crypto projects according to the level of ongoing development activity in their respective ecosystems.
The rate of development activity in a crypto network usually impacts the crypto assets’ prices, including the trading volume of the various trading pairs and on-chain activities.
No crypto exchange would want to keep a stagnant and growth-irresponsive project listed on its platform.
- Trading Volume and Liquidity
Liquidity refers to the ease with which traders can convert one token to another or fiat currency. Highly liquid assets have high trading volumes, and vice versa.
Liquidity also indicates market stability. And hence crypto exchanges would not want illiquid assets on their platform, as keeping them is not profitable.
- Safety and stability of Network to attacks
A network prone to hack attacks or scams poses deterrent factors to users and cryptocurrency exchanges, and they are liable to cause loss of funds.
- Response to due diligence requests
Crypto exchanges like Binance often conduct initial and periodic due diligence before listing a crypto project. It helps them to determine if such a project still meets transparency standards and other requirements.
A project without a timely and straightforward response to due diligence requests may be termed fraudulent and non-transparent.
- Smart Contract or Network Stability
A reliable and secure smart contract is key to a good crypto project. Cryptocurrency exchanges like Binance would not list a crypto asset on their platforms if they discovered the underlying smart contract is unreliable and insecure.
- The commitment of the Project Team
A highly committed project team building is crucial to the growth and development of a crypto project.
If the team is lackadaisical in its approach to project activities and collaborations, such a project will not grow. Binance would delist or not list a project with a non-committed team.
- Evidence of unethical/fraudulent conduct and negligence
This is among the most crucial factors a crypto exchange must consider before adding a crypto project to its platform.
Unethical/fraudulent cryptocurrency projects have repeatedly resulted in massive loss of funds for traders and trading platforms in the crypto industry.
An example of such a scenario is the FTX collapse, where users incurred losses due to fund misappropriation by the management team.
- Others
Other criteria Binance uses to vet crypto assets to list include, the level of public communication, evidence of unethical or fraudulent conduct and negligence, the project’s response to due diligence requests, and the project’s contribution toward the health and sustainability of the crypto ecosystem
Binance said it would decide to delist a cryptocurrency trading pair or project if it fails to meet its standards based on the above-listed requirements.
Following these criteria, the crypto exchange decided to delist the trading pairs HNT/BUSD and WABI/BTC on March 24, 2023.
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Factors to Consider When picking crypto projects to Invest
- Read the crypto projects, White Paper
There are tons of emerging and existing cryptocurrency projects on the market. But before investing in any, it is advisable to conduct your due diligence by reading the white papers.
A good crypto project should have a white paper, an easily accessible one at that. If not, consider that a red flag.
The white paper will tell you everything about the project. A white paper without specific details and realistic goals raises a red flag against committing funds to the project.
- Asses the Project Team
After checking the white paper, run a background check on the project team. Find out if anyone among the team has worked on a reputable project.
Are the team members reputable stakeholders in the blockchain community? What is their respective qualification? That will help you know if there are suspicious backgrounds regarding the project before investing.
- Check the project on social media.
Another way to find information about a new coin offering is to monitor the token’s community on social media like Twitter, Telegram, or Reddit.
Doing this will gain knowledge of what others are saying about the project and help you make guided decisions.
- Check if the token’s project is solving a real-world problem
Before you invest in any crypto, try to verify its utility value. Is it solving a unique real-world problem? Crypto tokens with unique real-world solutions would likely attract high demand and boost their trading value.
- Verify if the token is on trusted exchanges.
Trading on trustworthy platforms with an interactive community can give you peace of mind. You may not have to spend long hours on the screen analyzing the project since you’ll get reliable information from the exchange.
Again, your assets would be safe if you commit funds to a good project through trustworthy and secure platforms.
- Legal Constraints
Before diving into a new crypto project, verify if your jurisdiction’s legislation allows you to participate.
Find out if the regulators in your area have no restrictions to such offerings to ensure you’re not breaking the law.
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Final Thoughts
Cryptocurrencies are high-risk and volatile assets. And so, investors must ensure they commit funds to genuine projects through reliable platforms to minimize such risks.
The rate rug pull projects roll out these days has made trading platforms and investors weary in committing funds to crypto projects to avoid loss.
So even though the criteria above are unique to Binance investors can also adopt them to gauge crypto projects before investing. That way, the hype and fake endorsements and advertisement won’t affect your decisions.
