What is a cryptocurrency listing?
What is cryptocurrency listing
Listing is the admission of a company's securities to trading on a stock exchange. A listing of securities becomes necessary when a public company plans to issue shares or debentures to the public. In order for assets to be listed on a particular stock exchange, a company must meet a number of requirements, some of which are common to all trading floors and some of which relate to individual conditions.
Listing provides an exceptional privilege to securities - the stock exchange ensures transparency of securities transactions, as well as equality and competitive conditions. Listings are beneficial for companies, investors and the general public alike.
The listing of new cryptocurrencies is an equally important process. Every ICO will end sooner or later, but this should not lead to a drop in the number of people interested in the project. This is where exchanges come to the rescue, allowing companies to continue popularizing their cryptocurrency after the ICO is officially over. Placing a token on an exchange can increase its value by 15-20%. For this reason, cryptocurrency placement is one of the most important tasks for a company after the Initial coin offering.
Why Exchange Lists Matter
Coin introduction on respected and large trading platforms makes a huge difference - in fact, it is the difference between success and failure of the entire campaign. For ICO projects that leave most of the currency to themselves and their team, this support for the coin is like a guarantee that they will have enough money to support and grow their project. There also needs to be some stability for success, with no fluctuations in value, especially if the token owners plan to use their coins as part of project development for various activities and developments. Plus, the reputational point is important - the more popular and liquid trading platforms support token exchange - the better its reputation becomes, the more users acquire it, the more interest in the project itself and, as a consequence, the more interested investors.
General requirements for placing a token on an exchange
Now the market can offer more than 500 exchangers, and new ones appear almost daily. The requirements for listing vary on each platform, but there are general conditions that must be met.
- The project must be original and bring valuable innovations to the crypto-world. That is, there must be quality and valuable products or services behind the token. It is worth remembering that copies of blockchain scenarios or existing platforms are not considered in the sense of uniqueness, because they can be one-day projects and will not be able to gain a foothold in a market that is developing by leaps and bounds. The idea is that the project must be original for a reputable exchange to be interested in it. It must show an innovative way to fill certain gaps in the market or provide a better alternative to already functioning products.
- Developers need to pay special attention to design and project code. Small exchangers may not focus on such characteristics, but large resources will. If the project is full of weaknesses that can play into the hands of hackers and lead to the theft of assets, it will never pass the rigorous selection and will not be successful.
- Exchanges also always require all information about the project, such as technical specifications, details about the team, and the business plan for selling the token. Some may request a code review to make sure the project is transparent and secure. This is the reason most ICOs post data about their source code on GitHub. They may also request: token delivery size, transaction fee levels, all visual data that relates to the coin, such as the logo.
- Each token must pass the Howey test in order to be listed on an exchange. This is a test created by the U.S. Supreme Court to determine whether certain transactions qualify as "investment contracts. If so, these transactions are considered securities under the Securities Act of 1933 and the Securities Act of 1934 and therefore subject to certain usage and registration requirements. This is the main reason why, to avoid legal issues and to comply with the law, many exchanges will only accept service tokens and digital currencies for listing. Sometimes an exchange may be required to provide a written statement from a law firm to prove that a coin is not a security.
What we emphasized above are just the basic requirements that you need to be prepared for. On top of all that, exchanges have their own individual requirements, which will vary from one exchange to another. But in any case, the first thing you will need to do to get the token listed on the crypto exchange is to contact the right platform.
For example, if the goal is to get listed on Binance - the site has a special page through which blockchain projects can submit their coins for consideration. It is not always that easy, and sometimes it takes more effort and searching for the necessary contacts to contact a particular exchange and send them your coin. And then there is a long waiting period while the exchange evaluates and analyzes the project.
It's also important to keep in mind that some exchanges charge a fee for listing cryptocurrencies, and it can be quite high (reportedly from $50,000 to $1 million in BTC), so an aspiring startup must be able to meet such financial requirements.
One of the biggest hurdles that projects need to overcome is finding a way to allow users to openly exchange and trade newly issued token. Large exchanges have now reached a critical mass of different tokens, so they are asking more questions and paying more attention to the quality of projects. Providing incorrect or knowingly false information when communicating with them can be fatal. Smaller exchanges are still focused on quantity, but that does not mean they will accept projects that do not meet the fundamental selection criteria.