Cryptocurrency OTC Desks
Genesis Trading is an OTC digital currency trading platform serving the needs of institutional buyers and sellers. It grants access to block size liquidity for high-net-worth individuals or institutions looking to buy or sell cryptocurrencies. Genesis has been facilitating transactions of illiquid assets for over 10 years, and today, the service provider is one of the leaders in the industry and among the most popular OTC desks. Since May 2013, Genesis has been providing two-sided liquidity on a daily basis for buyers and sellers of digital currency. Genesis Trading's OTC desk service supports multiple assets, including BTC/XBT, ETH, BCH, XRP, LTC, ETC, ZEC, and more. The platform holds an NYS DFS BitLicense and its services are regulated by FINRA and SEC. The minimum transaction limit is set at $75 000. Genesis Trading offers deep liquidity, same-day settlement, and timely support.
Coinbase Prime is an OTC trading service by the most popular cryptocurrency exchange worldwide. The platform grants access to advanced institutional trading capabilities such as margin finance, high-touch execution including OTC block trading, and execution algorithms. Institutional clients can access the same diversified liquidity pool underpinning all Coinbase products through a professional trading platform designed especially for them. They can also benefit from a dedicated team of institutional coverage professionals based in NYC that will guide them through the onboarding process, advise on execution strategies, and deliver best-in-class client services and support. Clients' digital currencies are stored in Coinbase's proprietary state-of-the-art integrated custody architecture.
B2C2 is a cryptocurrency OTC trading service provider, headquartered in London. Since 2015, the company has been trying to bridge the gap between traditional financial infrastructure and cryptocurrency markets. Brokerage firms, exchanges, banks and cryptocurrency funds around the world trust B2C2 to deliver seamless execution in the major cryptocurrencies and fiat currency pairs. The platform provides 24/7/365 liquidity for Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Ripple, and Ethereum Classic in USD, GBP, EUR, JPY, SGD, AUD, CAD, CHF and more. B2C2 also offers synthetic exposure to crypto. The platform offers its clients instant execution with post-trade settlement 24/7/365. B2C2's OTC business services everything from small algo trades to multi-million dollar blocks.
HiveEx.com is a global OTC & brokerage desk specialized in large order cryptocurrency trading. The platform's clients can enjoy internationally sharp pricing on all major crypto-to-crypto and crypto-to-fiat pairs made possible due to HiveEx.com's partnership with the top liquidity providers on the planet. Users who want to become HiveEx.com's clients can reach out to their dedicated team and secure better pricing on trades from $50 000 to $100M USD. The platform supports all leading digital assets and stable coins. In addition, HiveEx has secured banking arrangements that enable fiat settlements in USD, AUD, GBP, EUR, NZD, SDG, HKD and the majority of the other major currencies. For each trade, the client is quoted a single price, with no other fees. In most cases, the settlement is within the same business day.
Kraken's over-the-counter (OTC) trading desk service offers deeper liquidity and more personalized service to institutions and high-net-worth individuals. According to the Kraken's team, no matter whether you are trading blocks of $100,000, €10,000,000, or 2,000 Bitcoin, the OTC desk will ensure execution and settlement services that are discreet and secure. Kraken's OTC desk's clients can receive daily trade and market recaps, as well as expert desk opinions on the current crypto market. There is also a 1-on-1 service that includes everything from the initial expert consultation all the way through to trade execution, with trade reporting and market insights. In addition to OTC bitcoin trading, the Kraken OTC desk supports all fiat and digital currencies listed on the Kraken Exchange.
ItBit offers its clients a personalized OTC agency trading desk service for traders who execute large block trades starting over $50 000. The service is often preferred due to its personalized trading experience and dedicated personal trading support designed to emphasize and satisfy the needs of the investor. The itBit's OTC trading desk service allows investors to work privately with a professional trader straight through settlement. The service is renowned for its deep liquidity, same-day settlement, and the fact that it serves a global network of clients across more than 100 countries. It also supports many digital assets including BTC, ETH, BCH, LTC, XLM, PAX, BUSD, PAXG, USDT and more coming up continuously. When it comes to costs, itBit's trading fee structure is among the most competitive on the market. Clients are charged flat rate fees per transaction with no additional crypto withdrawal fees.
DV Chain is a liquidity provider, focused on satisfying the needs of large-scale investors in the cryptocurrency space. Since 2006, the company has been focused on pioneering new market frontiers and expanding its liquidity provision on the existing ones. The company makes markets across all major exchanges and provides a significant scale in over-the-counter (OTC) trading with large institutional buyers and sellers of crypto assets. To become a DV Chain OTC client, one should comply with the eligibility requirements subject to KYC and other policies, published on the company's website. DV Chain offers flexible terms and states that it has the ability to trade a variety of cryptocurrencies with investors being free to inquire about particular assets that appear to interest them.
Kaiserex is a cryptocurrency exchange and an OTC trading desk serving clients since 2015. The platform's OTC trading desk can execute buy and sell orders of larger quantities of supported cryptocurrencies at attractive rates. The minimum trade size is at least 50 000 EUR. The trading fees are fixed at 1%. Kaiserex claims to have a long-standing track record of doing a very good job of getting good prices for its clients. The platform claims that it is very likely for it to offer a competitive rate since it is connected to 37 cryptocurrency exchanges worldwide and dozens of other OTC desks, miners and investors. To be eligible to engage in OTC trading, one should submit an OTC application form in compliance with the service provider's KYC requirements and wait for approval.
Koi Trading is an OTC trading desk that provides private, efficient, and compliant cryptocurrency liquidity to counterparties around the world. The service provider welcomes institutions and high-net-worth individuals with sustained needs to trade significant amounts of cryptocurrency. Koi Trading also trades with other types of counterparties on a discretionary basis. Other than jurisdictions identified by FATF to be a high-risk or monitored jurisdiction, the platform doesn't generally reject account requests based on where counterparties reside or are incorporated. In fact, it is one of the few OTC desks to accept Chinese entities and individuals. Due to overwhelming demand, however, the platform's team states that they are currently only accepting counterparties whose monthly trading volume is expected to exceed USD 500 000.
Through its Bitpanda Plus program, Bitpanda, one of the world's top cryptocurrency exchanges, satisfies the trading needs of high-volume clients and institutions. The service is designed exclusively for Bitpanda customers, who wish to increase their limits beyond the default ones and trade with large volumes. Bitpanda's OTC offering is available to clients who are interested in purchasing or selling amounts over € 1 Million. The service is highly specialized and tailored to individual customers. The benefits of using Bitpanda Plus include trading via Europe's leading retail cryptocurrency broker, ability to trade BTC, ETH, DASH, LTC, BCH, XRP and other digital assets, full wallet integration for all tradeable assets, industry-leading KYC/AML compliance policies, and state-of-the-art security system.
Binance OTC is the trading arm of the world's leading cryptocurrency exchange dedicated to offering its users the chance to trade large block sizes (usually over 10 BTC) quickly and securely. Binance OTC offers access to over 70 coins, which is more than the majority of other service providers. The platform can even accommodate trading of unlisted pairings such as altcoin to altcoin trading. Large-scale investors prefer Binance OTC as it offers a deep liquidity pool, particularly in the altcoin markets (even for altcoins with a low market cap). The platform provides fast, hassle-free settlement and personalized trading support performed via 1-on-1 chat rooms. Settlements occur within the Binance ecosystem and are generally completed within minutes.
Through its TradingVolumes.com partner, HitBTC, another popular cryptocurrency exchange, offers quick and easy access to a deep pool of liquidity. The personalized OTC (over-the-counter) trading service allows investors to execute high-volume trades without going through public order books. The platform helps its clients facilitate their deals directly with the counterparty without affecting the market price of the coin or token. The joint partnership allows the service providers to guarantee personal support and fast execution from highly experienced traders at the most competitive prices. To be eligible to use the service, investors should place a trade that exceeds the equivalent of $100K USDT by volume. The commission for OTC trades is fixed at 0.1%.
Athena Investor Services is specialized in offering a personalized OTC crypto trading service to individuals and institutions. The goal of the team is to specifically fill the gap between the company's wide ATM network, BitQuick's services for smaller amounts and existing OTC platforms requiring very high investment amounts. AIS state they want to partner with each client to make sure they understand their crypto investments and provide them with a quick and simple way to make a trade. AIS's approved clients have access to a variety of digital assets including BTC, BCH, ETH, LTC, and XRP. Athena doesn't charge a commission on any transaction. Rather, the investor is quoted a spread over the phone based on the relevant index that is competitive with the market. The price quoted is all-inclusive, and there are no additional fees charged by AIS. The minimum per coin per transaction is set at $10 000.
Galois Capital runs a robust OTC crypto trading desk, providing coverage seven days a week. The company is focused on helping its clients transact a wide variety of cryptocurrencies, allowing them to minimize their execution costs. Galois Capital has established relationships with many of the major exchanges as the company strives to provide a greater suite of tradeable products. The service provider is able to make markets in any coins that are traded on Binance, Coinbase, Kucoin, Bittrex, FCoin, and Kraken but is particularly specialized in being able to price large blocks of more illiquid pairings. All trades executed on the platform are with Galois Capital's own funds and there is no matching between buyers and sellers.
Cryptocurrency OTC services provided by BitBay allow users to execute large trades with one simple click. The platform serves institutional and high-net-worth clients who seek to buy or sell large blocks with a fixed price. BitBay grants its users access to dozens of liquidity pools in one place, while the RFQ allows them to receive a single price on screen in just milliseconds before they decide to execute the trade. BitBay's OTC service is a perfect solution for clients seeking to get access to a large number of digital assets priced in USD, EUR, PLN, and other fiat currencies globally. BitBay also offers its clients access to one of the leading crypto clearing houses worldwide, which allows clients to get institutional-grade access to digital asset markets globally without sending to BitBay a single dollar.
Bitstamp, one of the oldest Bitcoin exchanges around, offers its institutional clients the chance to expand their offerings across top cryptocurrency assets and access markets that never close. The exchange's OTC desk serves NEO banks by helping them create custom crypto offers and eliminate barriers to entry into digital currency markets. Bitstamp also works with traditional banks to help them ease their clients safely into cryptocurrency trading with a customized solution. Bitstamp's service has managed to establish itself as one of the most popular in the fields due to the fact it ensures regulatory clarity and a premium support team that is available 24/7. Bitstamp's partners get dedicated account managers who offer support for custom solutions.
Wyre is a regulated payment institution that leverages its global licensing structure and banking relations to run an institutional trading desk for cryptocurrency liquidity. Since 2013, the company has traded over $3.5B USD in crypto assets in-house. Wyre OTC allows its clients easy and timely access to institutional market coverage and provides the best in class execution and liquidity for institutions. Working with top global crypto exchanges and offline liquidity pools, Wyre is able to meet liquidity needs by delivering aggregate pricing across multiple markets along with same-day settlements. By being connected to dozens of liquidity channels across key regional markets, the platform is able to offer highly competitive pricing.
Founded in 2014, Coinhako is considered Singapore’s most trusted and renowned blockchain wallet platform. Over time, Coinhako scaled its business and managed to establish itself as a preferred cryptocurrency OTC trading desk. Having had years of experience as a gateway between digital tokens and fiat currencies for B2C users, the OTC desk enables Coinhako to act as a trusted partner for institutions, brokers, and exchanges. The company is focused on upholding the highest standards of compliance and customer service, allowing its institutional clients to enjoy a seamless service experience. The platform provides 24/7/365 liquidity for Bitcoin, Ether, Litecoin, Bitcoin Cash, and Ripple and ensures fast trade settlement and competitive prices.
Bity's global desk offers personalized and private OTC services for traders wanting to execute large transactions that would otherwise cause liquidity problems on the market. The OTC trading service is available for a wide range of cryptocurrencies and digital assets including, but not limited to, bitcoin, ether, and augur. Bity's platform serves as a stage for investors who want to execute large orders of cryptocurrency and do so quickly, conveniently, and privately. OTC orders are made directly with other traders and executed off the exchange order books which helps avoid market manipulation that may end up negatively affecting pricing and reducing purchasing power.
Through its OTC trading desk, Huobi, one of the world's most popular and active cryptocurrency exchanges, also serves institutional and high-net-worth clients. The Huobi OTC Desk is regulated with DLT License to provide crypto trading services for professional and institutional clients. The service allows clients to trade with a regulated, highly capitalized counterparty. All of the clients, using the Huobi OTC Desk, are subject to best-in-class KYC/AML procedures. The platform is a popular choice among institutional clients due to its competitive pricing policy and the lack of extra fees on top of the quotation. The Huobi OTC Desk ensures robust liquidity, guaranteed block execution, as well as comprehensive multi-asset and 1-on-1 trade support. Clients can also take advantage of live requests-for-quotes and global execution coverage.
Through its Gemini Clearing™ OTC service, one of the world's leading cryptocurrency exchanges offers a trusted solution for fully electronic clearing and settlement of off-exchange crypto trades. Gemini Clearing allows two parties, subject to Gemini’s KYC onboarding and AML requirements, to settle a trade off the order book. Gemini acts as a confirming third party in pre-arranged transactions, helping ensure timely order settlement while mitigating counterparty risk. Gemini Clearing requires no minimum trade size and is available at a market-competitive price point. Gemini also offers a white glove solution to clients seeking additional service and control. Gemini Clearing facilitates Bitcoin and altcoin trades immediately (or in an approved Settlement window). Transaction information is known only by the counterparties and no trade details are published to Gemini’s market data feed.
RockItCoin OTC is an institutional trading desk focused on making large-block crypto trading affordable to clients of all sizes. From big companies and funds to family shops and boutique investment firms, RockItCoin serves everyone who can comply with its $10,000 trading minimum requirement. Most of the OTC trades are settled the same day. RockItCoin's clients can also get hands-on help from an experienced trader in the form of a 1-on-1 consultation so that they can get all their questions answered and mitigate the associated trading risks. RockItCoin maintains a global network of partners and liquidity providers which means all trades have their price locked and are executed quickly.
Founded in 2014, DigitalMint has over 30 years of combined experience in capital markets, compliance, and cryptocurrencies. DigitalMint’s over the counter cryptocurrency trading platform provides high-liquidity trading options for individuals and institutional investors. Digital Mint's team of financial and Bitcoin experts has previously worked with organizations such as Coinbase, Charles Schwab, HighTower Advisors, and American Express. The platform enables trading across a wide range of cryptocurrencies including Bitcoin, Litecoin, Ethereum, and more. It also provides investors with deep liquidity, personalized around the clock support from trading specialists via email and telephone, and flexible transaction limits in the range of $5 000 to $1 000 000+.
LGO prides itself as one of the leading institutional capital markets for digital assets in Europe. The company provides its clients with the chance to buy, sell, lend, and borrow cryptocurrencies, stable coins, and tokenized assets in large quantities. LGO's OTC execution product is available to institutional clients such as hedge funds or family offices, as well as corporate clients like payment service providers. The platform allows users to trade anonymously against a range of liquidity providers, enjoy low slippage for large size trades, request quotes for specific trades, and settle post-trade at the end of the day. LGO's OTC execution product supports the 10 most popular digital assets and all G20 currencies. Trading is open 24/7 and the minimum trade size is fixed at $50,000.
Yellow Card has a well-developed OTC crypto trading desk service. The personalized service is suitable for traders looking to buy or sell cryptocurrencies worth a minimum of $10,000. The platform works with leading liquidity pools across the world to ensure the lowest prices no matter the size. Yellow Card's OTC trading desk is preferred due to the fast trade settlement with an average time of just a few minutes as well as the personal trading support that allows clients to work directly with Yellow Card's experienced team. The trading desk offers tight spreads and doesn't charge any withdrawal fees.
XBTO is a company focused on becoming a world leader providing access to cryptoﬁnance services. Since 2015, the platform has been among the top OTC trading service providers worldwide. As one of the first market-makers in the industry, XBTO Trading is trusted by a wide range of market participants - from high-net-worth individuals to corporate investors and funds. XBTO's OTC trading services combine market liquidity with discretion, accountability, and flexible terms. Traders can execute large transactions promptly without the price slippages and order book visibility of platform trading. Aside from its OTC services, XBTO is also active in platform trading, asset management, venture capital, cryptocurrency mining, and the development of cutting-edge solutions for stablecoins.
TrigonX is considered Australia's leading OTC service provider. The company serves institutional investors and high-net-worth individuals who are looking to participate in high liquidity markets for digital currencies like Bitcoin, Litecoin & Ethereum. TrigonX offers its clients full privacy and ensures that no transactions are disclosed to the public. The platform is a preferred choice due to the same-day trade settlement it guarantees and the years-long expertise in operating institutional OTC markets. TrigonX's platform is a source of deep liquidity and provides instant access to high volumes for digital currencies through a wide network of trading partners. As an Australian OTC Digital Currency Exchange, TrigonX is registered and regulated under AUSTRAC.
Enigma prides itself on offering best-in-class execution and competitive pricing for large-scale cryptocurrency trades. The company provides stellar OTC brokerage services for cryptocurrency traders and engages only with trusted institutional entities, conducting full KYC/AML reviews prior to onboarding clients. As a result, the company states that the members of its ecosystem are ensured to always be dealing with a trusted counterparty. Enigma has a proven track record, working with mining firms, exchanges, institutional investors, and other corporate entities. Hedge funds, digital asset managers, and various players in the crypto industry trust Enigma to deliver seamless execution in major fiat and cryptocurrency pairs. The platform supports BTC, ETH, XRP, LTC, and BCH with more trading pairs available upon request.
Founded in 2013, GSR is a leader in algorithmic digital asset trading that offers a range of services and strategies to serve clients seeking convenient cryptocurrency trading services. The platform offers access to a deep pool of OTC liquidity built on the stable and long-lasting relationships it has developed with leading crypto trading platforms. GSR's clients can take advantage of direct trades from $100K+ and 24/7 market access running over a high-security infrastructure. GSR's wide network of banking partners allows the platform to trade with a myriad of counterparties worldwide and offer post-trade settlement services in USD, EUR, JPY, and other major currencies. The OTC desk supports many of the top assets such as BTC, ETH, and XRP as well as a variety of altcoins.
Based in New York City and Singapore, Altonomy is a world-leading trading and asset management firm operating in the crypto space. Altonomy provides 24/7 OTC transaction services for crypto-to-fiat and crypto-to-crypto transactions, while simultaneously offering best-in-class coverage for illiquid tokens. The company's proprietary Hybrid IQ methodology combines the team's extensive crypto market experience with market-making algorithms to provide clients more control, flexibility, as well as a deeper liquidity pool and optimal spreads while keeping market impact at a minimum. In doing so, Altonomy ensures the best execution of token trades with varying liquidity. Altonomy's clients benefit from instant live quotes on demand and round-the-clock coverage, as well as transparent pricing with competitive all-in quotes for each transaction with zero added fees.
Digital Asset Management or DAM offers its clients an over-the-counter (OTC) service that can facilitate the buying and selling of digital assets with FIAT for individuals and institutions. The supported fiat currencies include USD, GBP, EURO, CAD, AUD, CHF, HKD, ILS, INR, JPY, NZD, SGD, ZAR, NOK, and SEK. The supported cryptocurrencies include Bitcoin, US Dollar Tether, USD Coin, EOS, Ethereum, Litecoin, Bitcoin Cash, Ripple with additional being added continuously. Digital Asset Management serves a variety of different clients including ICOs, STOs, investment funds, crypto exchanges, law firms, family offices, high-net-worth individuals, real estate, sports teams, ICO/STO accelerators or incubators, bank and e-money institutions, and more.
Blockfills is among the first electronic, off-exchange, digital liquidity providers operating using an electronic communication network model (“ECN”). The company provides aggressive streaming liquidity aggregation and OTC trading solutions, some of the deepest liquidity pools in the world, and cutting edge technologies to deploy this liquidity to end-users anonymously in an impactful way. The platform sources its liquidity from the world’s largest non-bank trading institutions and matches its clients to the best available price. Blockfills serves exchanges, funds, trading groups, family offices, brokers, professional traders, and more. The platform's OTC service grants its clients access to up to 100 instruments from a 24-hour trading desk via voice, request for quote, or chat.
Koinbros is a privately-owned multi-strategy trading firm specialized in market-making services and over-the-counter trading on post-ICO utility tokens. The company is focused on providing an all-around personalized service from inquiry through the settlement of the trade. Koinbros' clients can take advantage of a straightforward conversion of large blocks of post-ICO cryptocurrencies to fiat. The platform provides upfront, all-inclusive pricing with multicurrency settlement available. All trades are settled quickly through Koinbros' channels and a wide network of instant liquidity providers. The company's structure relies on a blend between a team of high-caliber people, innovative quantitative modeling techniques, and cutting edge technology to seek out opportunities around cryptocurrency markets.
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Frequently Asked Questions
What Is OTC Crypto Trading?
OTC or "over-the-counter" crypto trading is an alternative to trading on exchanges. In the legacy financial world, the OTC market is a place where parties can transact in non-standard quantities and at prices that aren't available on the New York Stock Exchange, Chicago Mercantile Exchange, and other public venues. OTC trading is also popular with firms that can't comply with the listing requirements of formal exchanges.
For crypto traders, the main reason to deal over-the-counter is the lack of liquidity on exchanges. When liquidity is low, it's difficult to buy and sell at stable prices.
Exchange vs. OTC Trading
There are two key differences between crypto exchanges and the cryptoasset OTC market: how prices are set and how trades are executed. On exchanges, sellers post a price at which they are willing to sell, the ask , buyers post a price at which they are willing to buy, the bid , and all trading happens in public.
Exchanges are great for small transactions, but it's not always possible to fill large orders at the most favorable bid or ask prices. For example, imagine that a buyer wishes to purchase Bitcoin (BTC) at the going rate, say $20,000. If there aren't enough sellers at $20,000, the order will be partially filled at $20,000 then completed at the next lowest ask prices. The buyer gets their Bitcoin, but at a higher cost than they planned.
This is known as slippage , typically defined as the gap between the expected price of a trade and the price at which it is executed. Slippage occurs in markets with low liquidity. While crypto's market cap has grown, it is dwarfed by the commodities, stocks, and forex markets – both in terms of size and activity. In 2021, it's still difficult to move large amounts of cryptocurrency on exchanges. There are too few traders to get deals done at going market rates.
As a consequence, funds, high-net-worth investors (HNWIs), and institutions hit the crypto over-the-counter market where they can transact independently of exchange order books. This enables them to secure a steady price for each unit traded.
The second key difference between exchange and OTC trading is how trades are executed. When trading on a centralized exchange like Binance, funds are held by the platform and distributed once a trade is executed. With OTC trading, parties work out the transfer details themselves, so there's a chance that one side could default before the trade is completed. To minimize this risk, desks verify the identity and reliability of transacting parties, offer escrow accounts, and enter into legally binding agreements.
Who Trades Crypto OTC?
Cryptocurrency OTC desks appeared shortly after the Bitcoin whitepaper. The first US-based desk, Genesis Trading, was launched in 2013. It was set up to serve "whales" like the HNWIs and institutions mentioned in the previous section as well as Bitcoin miners who wanted to flip their rewards for cash without roiling the markets.
Today, billions of dollars of crypto flow through OTC desks. Per most estimates, more cryptoassets are traded over-the-counter than on exchanges. Genesis and its competitors continue to serve whales and miners plus ICO founders, exchanges, other desks – anyone looking to trade large amounts of crypto.
Why Trade Crypto OTC?
The cryptoasset market is still in its early stages, and it's tough to move mass quantities without experiencing slippage. To secure a consistent price, traders turn to the OTC market where they can deal independently of public order books.
By going off-exchange, traders also get around exchange limits and fees. While deposit and withdrawal restrictions are loosened for high rollers, nearly all transactions are subject to charges. The amounts are small, but they add up quickly, especially for deals big enough for OTC desks. Exchanges offer tiered fee schedules with lower percentages for larger orders, but the reality is, the bigger the deal, the less likely it is to occur on a single exchange. To avoid slippage, whales split orders across multiple venues.
In over-the-counter crypto trading, desks only charge fees when they act as an intermediary, connecting buyers and sellers. Principal desks, which take the other side of every deal and trade from their own inventory, make money on the spread. That is, they buy at a discount and sell at a premium. Generally, working with a principal desk is more cost-effective and efficient than sourcing or selling cryptoassets on public exchanges.
How Does OTC Crypto Trading Work?
Crypto is not a mature market, and exchanges may lack the liquidity to complete trades at steady prices. When this happens, orders are started at the going rate then filled at the next best price, and the next best price after that until completed. This phenomenon is known as slippage.
The OTC or over-the-counter market exists as an alternative to exchanges. It lets funds, high-net-worth investors, and institutions avoid slippage by setting prices independently of exchange order books.
Types of OTC Crypto Trading
OTC can be any type of off-exchange trading – from a face-to-face Bitcoin swap at a local coffee shop to the big-ticket transactions handled by desks like Genesis, Coinbase, and Kraken. Terms like "face-to-face" and even "peer-to-peer" imply smaller transactions, deals made in-person or on platforms like LocalBitcoins, a marketplace that matches traders and offers escrow and payment processing services. The desks on this list focus on institutions, HNWIs, and other whales who wish to move large amounts of cryptocurrency without experiencing slippage.
How to Trade Crypto OTC
The typical OTC transaction starts with an email from a prospective customer. If they meet the desk's minimum trade requirement ($25,000 to $75,000+), they proceed to onboarding and know-your-customer or KYC verification. Any regulated institution or desk operated by a major exchange will require KYC, which may include proof of address, proof of income, government-issued ID numbers, and copies of driver's licenses and passports for all authorized traders.
Once the paperwork is finished, the customer can place their order. The desk will quote a price, which the customer can decline, counter, or accept. If they accept, what happens next depends on the service the desk is performing. If the desk is acting as a broker, the customer will be asked to place funds in escrow or swap deposit and wire instructions with a counterparty , the entity on the other side of the trade. If the desk is acting as a principal – if the desk is the counterparty – the customer will sign an OTC agreement detailing their responsibilities.
How Crypto OTC Desks Manage Risk
The main risks faced by desks are counterparty and inventory risk.
In exchange trading, payment is guaranteed by the exchange. OTC works differently. It's post-trade settled, which means that customers are not required to deposit cash or crypto before the desk pulls the trigger on a trade. To protect themselves from deadbeat counterparties, desks perform thorough KYC checks and demand legally-binding OTC agreements.
Whenever desks trade from their own inventory, they risk overexposure to the wrong asset or asset class. To manage this, desks buy and sell on public crypto exchanges. This is always done slowly and across multiple venues to minimize slippage. Desks also share risk with competitors. For example, a desk could source half an order from a competitor and fill the rest from its own inventory. Sometimes, a desk will simply warehouse an imbalance and wait for another party to come along with matching counterflow.
For an in-depth discussion of how desks handle risk, check out Flippening episodes 30 and 31 with Kevin Zhou of Galois Capital, a crypto hedge fund specializing in OTC trading.
The Agency Model
Counterparty and inventory risk are concerns of principals, desks that trade from their own inventory and profit on the spread. There's another type of desk, the agency desk, which acts as a middleman. It matches buyers and sellers and takes a fee for its services.
When crypto custodians and exchanges offer OTC trading, it is usually through an agency desk. This can be a major value-add. If a custodian or exchange already holds a customer's funds – either in cold storage or in a hosted account – onboarding was done, and there's less chance that money or sensitive financial information will have to change hands. Trading is quick and easy.
Who Are the Best Crypto OTC Desks?
When it comes to choosing an OTC desk, there's no objective "best." Rather, prospective customers should evaluate desks by how they fit with their values and business needs. There are traders whose primary concern is anonymity. Others, who expect to share personal and financial details, may focus on whether a desk acts as a broker or principal, its suite of trading tools, or how closely it can be integrated with complementary solutions.
Comparing Crypto OTC Desks
If a customer meets a desk's minimum trade requirement – usually $25,000 or more – the first official step is onboarding and know-your-customer or KYC verification. When dealing with an unregulated intermediary, it might be enough to provide an email, a preferred messenger app, and a username. Onboarding with a regulated institution or desk operated by a major exchange means providing proof of address, proof of income, a social security number or other government-issued ID, and copies of driver's licenses and passports for all authorized traders.
While crypto exchanges charge fees, OTC desks only charge when they act as a broker, connecting counterparties. When desks act as principal, taking the other side of deals and trading from their own inventories, they profit on the spread, the gap between their prices and the prices a customer would get on the open market. Customers accept this arrangement because market rates are not guaranteed. Exchange orders begin at current market rates but may be completed at less favorable prices. Known as slippage, this is the main reason that funds, high-net-worth investors, and institutions trade over-the-counter. For big transactions, the spread should be better than paying exchange fees.
One can trade cryptocurrency off-exchange without using a desk – face-to-face or through a P2P marketplace like LocalBitcoins – but desks are the only option for high rollers interested in combining over-the-counter trading with exchange, custody, or prime brokerage services.
During the "crypto winter" that followed the 2017 bull market, analysts predicted that corporations, endowments, and other whales would pour into cryptoassets as soon as the infrastructure could support them. By 2020, this belief was becoming reality.
In August and September 2020, MicroStrategy hired Coinbase to purchase $425 million of Bitcoin. The Virginia business intelligence firm wasn't alone. In November, British investment firm Ruffer turned to Coinbase for more than $700 million of Bitcoin. They chose Coinbase because it is a one-stop shop.
Coinbase was first to let customers trade OTC directly from cold storage. Previously, one would have to transfer funds from "cold" or offline storage to a "hot" or online wallet in order to execute a trade. The process could take days, impractical in a market like crypto where conditions change in the blink of an eye.
Through innovation like this and a string of acquisitions, Coinbase now offers exchange trading, over-the-counter trading, prime brokerage, and custody solutions, which customers can mix and match for an efficient, secure trading experience. MicroStrategy cites Coinbase's smart routing capabilities, time-weighted trading algorithms, and prime brokerage tools as reasons it was able to complete its OTC deal at a favorable price.
For institutions accustomed to working with the behemoths of the traditional financial world, Coinbase and other one-stop shops will likely be the "best" option. For those who object to KYC, the "best" choices are in-person trading or working with an unregulated desk.
How to Choose a Crypto OTC Desk?
Off-exchange trading takes several forms. Face-to-face transactions are quick and KYC-free. For those who don't mind verification, there are peer-to-peer marketplaces like LocalBitcoins. The desks on this list specialize in serving funds, high-net-worth individuals, and institutions that wish to buy or sell large amounts of crypto at a steady unit price. Desks can be compared by their respective onboarding procedures, fees, complementary services, and reputations.
As part of the onboarding process, all regulated institutions and desks operated by major exchanges require know-your-customer or KYC verification. Desks will ask for proof of address, proof of income, and government-issued ID. For customers who balk at sharing personal information, there are other options. Smaller, unregulated platforms may be satisfied with an email address and username. And there's always in-person trading, which involves as much or as little verification as the counterparties agree.
There are two main types of crypto OTC desks, those that follow an agency model and those that act as principals. The former take a fee for connecting buyers and sellers. Principals accept the other side of every deal, trade from their own inventory, and profit on the spread – the difference between their prices and going market rates. For funds, HNWIs, and institutions moving large amounts of crypto, either model will be more cost-effective than sourcing or selling cryptoassets on public exchanges where low liquidity causes trades to slip through order books.
To attract clients used to working with providers of the legacy financial world, some desks have combined OTC trading with exchange trading, custody, and prime brokerage solutions. The strategy is working. In 2020, business intelligence firm MicroStrategy kicked off a wave of institutional crypto buying by engaging Coinbase to purchase $425 million of Bitcoin. MicroStrategy chose Coinbase for its desk's integration with trading tools from its prime brokerage arm, Coinbase Prime. According to Coinbase, those tools saved MicroStrategy approximately $4.25 million over the course of its purchase.
OTC desks are also offering concierge-style customer service. Kraken boasts "high-touch service at every step" including expert consultation, trade reporting, and market insights. As more institutions enter the crypto space, these "white glove" extras are sure to increase in prevalence and importance.
There are many ways to measure a company's reputation. The entries on this list are ranked algorithmically, with reputation approximated from referral links, tweets, Reddit mentions, and other sources. Our buyer's guides are great for gauging a company's presence on the web and social media. But it's unlikely that traders moving crypto worth $25,000 to $75,000+ are all that focused on the quantity or relevance of desks' recent tweets.
Funds, HNWIs, and institutions value expertise. They gravitate to early movers like Genesis Trading and Kraken, which absorbed Circle, one of the first crypto OTC desks in the United States. One-stop shops like Coinbase lure customers eager to leverage their experience and suite of complementary services. It should come as no surprise that all three desks enjoy broad name recognition.
What Are Your Priorities?
At the end of the day, deciding how to trade off-exchange is about one's priorities. There's no KYC in face-to-face trading. While LocalBitcoins requires verification, it's a way for non-whales to find counterparties without resorting to exchanges. Customers that meet minimum transaction requirements and expect to undergo KYC may lean towards regulated one-stop shops that offer complementary custody and trading solutions.
What Are the Pros & Cons of OTC Crypto Trading?
A reputable cryptocurrency exchange will provide the average retail trader with all the functionality they need. Exchanges have fiat on- and off-ramps, they are compatible with hardware and software wallets, and many offer limit and futures trading. But for institutions moving large amounts of cryptoassets, exchange trading risks slippage, a gap between the expected price of a trade and the price at which it is executed.
Benefits of OTC Crypto Trading
Despite all the buzz, the cryptoasset market is in its early stages. There are too few traders on exchanges to fill big orders at going rates. Exchanges may start at the current bid or ask, but when they run out of traders at those prices, they proceed to the next best price, and the next after that until orders are completed. Trading over-the-counter lets parties set their own prices independently of order books, allowing them to secure a steady price for each unit traded.
In addition, over-the-counter trading spares parties the hassle of planning transactions around exchange deposit and withdrawal limits. It may also lead to savings on fees, which add up quickly for traders who move hundreds of thousands to millions of dollars' worth of crypto.
OTC desks only charge fees if they act as an agent, matching buyers and sellers. Principals, desks that take the other side of every deal and trade from their own inventories, earn money on the spread. They buy at a discount and sell at a premium. For big trades, either approach should be more cost-effective than splitting orders across multiple exchanges – a common strategy for minimizing slippage.
Drawbacks of OTC Crypto Trading
Off-exchange trading predates exchanges. In the beginning, it was the only way to trade, and the space acquired a reputation for being a sort of 21st century Wild West. While modern exchanges have made crypto safer, OTC trading is as popular as ever, and it can still be risky.
For whales who meet minimum trade requirements, there's nothing to fear. There are principals that act as counterparties and established agency desks that perform thorough KYC checks. But for traders who prefer to transact privately, little has changed from the old days. Some find boutique desks that require minimal KYC. Others simply chance the occasional scammer or deadbeat counterparty.
Another drawback to over-the-counter trading has been a lack of infrastructure, but that is changing. To attract institutional money, desks have bundled OTC with exchange trading, custody, and prime brokerage solutions. In 2021, crypto whales have access to secure, cold storage trading, advanced analysis and execution tools, and concierge-style services akin to those offered by legacy providers. The infrastructure will surely develop further as more institutions buy in.