OTC

OTC (over-the-counter) trading means agreeing a crypto trade directly with a dealer or another party instead of placing orders on an exchange's public order book. The buyer and seller settle on one price for the whole amount before anything executes. Exchanges, brokers and independent trading firms run OTC desks, mostly for institutions, funds, miners, companies and wealthy individuals who move large sums.

How OTC trading works

A typical OTC trade follows a request for quote (RFQ) flow:

1. Onboarding. The client passes KYC, and for companies KYB, often with more checks than a standard exchange account, such as source of funds.
2. Request. The client asks for a price on a specific asset and size, for example selling 50 BTC for USD.
3. Quote. The desk returns a firm price, usually valid for a few seconds to a minute. The desk's margin is built into that price as a spread, so there is often no separate trading fee.
4. Acceptance and settlement. The client accepts, and the assets and funds are exchanged. Settlement can be prefunded (both sides already hold balances on the platform), delivery versus payment, or post-trade within an agreed window for approved clients.

Many desks now offer this through a web portal or API with instant quotes, while very large or unusual trades are still negotiated by chat or phone. Desks act either as principal, taking the other side of the trade from their own inventory, or as agent, finding a counterparty or working the order across many venues over time.

Why it matters and when you need it

Large market orders eat through the order book. Selling $5 million of a mid-cap token on a spot market can push the price down several percent before the order fills, and the move is visible to everyone. An OTC quote fixes the price for the full size up front, so the client knows the exact cost before committing.

OTC also helps when:

• the asset has thin liquidity on public markets
• the trade must not signal intentions to other traders
• a company needs a fiat to crypto conversion with bank wire settlement and proper documentation
• a treasury wants one counterparty and one invoice rather than hundreds of fills

For orders of a few thousand dollars on major coins, regular spot trading or an exchange's convert feature is usually just as cheap and simpler.

Limits and risks

• Minimum size. Many desks require $50,000 to $250,000 or more per trade. Some exchanges run automated RFQ or block trading tools with lower thresholds.
• Hidden cost. The spread is in the quote, not on a fee schedule. Without comparing quotes against the live market, a client cannot tell how wide it is.
• Counterparty risk. Funds sit with the desk or move before the other side delivers. If the desk fails or the counterparty is a fraudster, the money can be lost. Fake "OTC brokers" on Telegram and social media are a common scam.
• Settlement risk. Bank wires take time, and crypto sent to the wrong address cannot be reversed.
• Regulation. Rules differ by country. Some jurisdictions require licensing for OTC dealers, and large trades attract more AML scrutiny.

OTC vs P2P

The terms get mixed up, especially in Chinese, where "场外交易" is often used for exchange P2P markets. OTC desks quote large trades to verified clients themselves or as an agent. P2P marketplaces match individual users who post ads, usually for small fiat purchases by bank transfer or e-wallet, with the exchange holding the crypto in escrow. Both happen off the order book, but they serve different users and sizes.

What to check when comparing OTC services

Ask several desks for quotes on the same size at the same moment. That is the most reliable way to see the real cost.