Yesterday, Coinbase announced the delisting of six assets: OMG Network (OMG), Augur (REP), Rally (RLY), Mirror (MIR), Loom Network (LOOM), and DFI Money (YFII). On March 29, these coins will no longer be available for trading on Coinbase, but users of the exchange will still be able to withdraw their funds.
Many Twitter users are confused by Coinbase's decision. Some of them think it is unfair that Coinbase has not explicitly disclosed the requirements that these particular coins did not meet, while others believe that the exchange should delist 90% of its assets as they are not traded by anyone, and leave only 15 to 25 coins that are "actual projects with a future." Another common opinion is that Coinbase should do a better job of assessing the assets before listing them in the first place.
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Previously, Coinbase CEO Brian Armstrong tried to provide more details on the listing process adopted by the platform in his March 2022 blog post (updated July 2022).
"At Coinbase, our goal is to list every asset that is legal and safe to do so, so that our customers are protected but we also create a level playing field for all the new assets being created in crypto," Armstrong explained, adding that while some crypto startups can potentially become industry leaders in the future that offer numerous benefits to customers, Coinbase has a role in protecting its customers from fraud and scams.
Coinbase's CEO emphasized that the exchange platform refrains from "picking winners and losers" since the company does not specialize in investment consulting. Instead, assets are judged on the compliance with the platform's minimum listing requirements, which include security and legality. At the same time, assets may no longer meet Coinbase's requirements, resulting in their removal from the list.
Armstrong admitted that the process of listing new assets may appear as "playing favorites," because Coinbase reviews certain assets faster than others and the likelihood of certain tokens being rejected by the platform is higher than others. The CEO noted that this is the direct result of the complexity of new assets.
He specifically mentioned that the process of listing for ERC-20 tokens can be quite fast as they are "relatively simple to evaluate and integrate technically." These are assets created according to standard guidelines that Ethereum-based tokens are expected to follow. At the same time, the Coinbase team finds tokens operating on other chains "more technically complex and harder to support." If their review requires too much effort, Coinbase may withdraw from their listing, which does not necessarily mean these tokens are of low value.
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However, according to the post, Coinbase was still willing to list "less proven assets" but planned to label them appropriately to inform customers of potential risks.
In an even earlier blog post, published by Coinbase in May 2021, the platform mentioned such criteria for asset assessment as the degree of centralization, security and verifiability of the code, real-world use, and security status.
Interestingly, some of the assets that will no longer be available through Coinbase belong to the projects that appeared quite promising in the past. For example, OmiseGo was highly praised by Vitalik Buterin, a co-founder of Ethereum, who called the model of OmiseGo's token OMG, his "favorite" in 2017. At the time, Buterin explained in his tweet that OMG was "not a medium-of-exchange token," had a "clear valuation model (expected discounted future tx fees minus node operation cost)," and was more legally defensible because it "required running node to get returns, not passive income."
OmiseGo, which aimed to improve the digital identification, payment system and privacy affected by know-your-customer (KYC) procedures in Thailand, was also one of the co-founders of the Ethereum Community Fund in 2018. The Fund was intended to support promising Ethereum-based projects with more than $100 million. In 2017, Omise, the parent company of OmiseGo, also partnered with MacDonalds Thailand and became the payment gateway for the restaurant's mobile delivery app and website.
There have been no major updates to OmiseGo's development recently, apart from its rebranding to OMG Network in 2020, when the company released its web wallet, block explorer, and official developer documentation portal.