What Is Over-the-Counter (OTC) Crypto Trading and How Does It Work?

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Main Points

  • Over-the-counter (OTC) cryptocurrency trading is trades made directly between two parties without the mediation of a third-party exchange.

  • Trade Desk is CoinFlip’s OTC trading experience that allows you to enjoy peer-to-peer transactions, low, transparent fees, and complete control over your investment journey.

What is over-the-counter (OTC) trading?

When it comes to financial markets, there are typically two ways to go about trading. The first one is through using an exchange. In traditional financial markets, third-party exchanges such as the New York Stock Exchange or Nasdaq help negotiate trades between buyers and sellers. Traders share the prices they are willing to sell, and buyers share the prices they want to buy. When these requests overlap, the exchange facilitates the trade. 

The second way to trade is over the counter or OTC. Rather than using an intermediary to facilitate trades, OTC trades happen directly between two parties, with one of those parties typically being an OTC trade desk service. OTC trading tends to be more discreet, and as such, tends to handle more significant volume transactions compared to exchanges. 

What does OTC mean in crypto?

Like financial markets, OTC cryptocurrency trading is trading performed directly between two parties, typically using an OTC desk. Depending on the trading desk used, these can be crypto to crypto trades (trading BTC for ETH), fiat to crypto (trading USD for BTC), or crypto to fiat (BTC to USD).  

Why use a cryptocurrency OTC desk over an exchange?

Crypto exchanges tend to be the most common choice for those entering the crypto market. Still, OTC trade desk services offer advantages that you cannot find using an exchange. 

One of the foundational principles behind Bitcoin and other cryptocurrencies is their peer-to-peer nature. Cryptocurrencies were invented as a way for people to make transactions directly with one another without any oversight from third parties such as banks. Cryptocurrency exchanges act as intermediaries between crypto buyers and sellers, adding a layer of centralized control over crypto transactions and deviating from the true intent of crypto. OTC crypto trading stays true to the fundamental tenets of crypto by facilitating direct, peer-to-peer transactions. 

Additionally, because OTC crypto trades are direct, you always have complete ownership of your crypto assets throughout the entire transaction. Trades are made directly to and from your personal wallet. Alternatively, when using an exchange, your crypto assets are technically no longer yours and are in the custody of the exchange. If the exchange is hacked or compromised in some way, you could lose your crypto. 

Another primary reason people prefer to use OTC crypto services is transparent fees. To learn more about this, check out our article Beware of the Hidden Fees.  

More reading: Why the Crypto World Is Turning to Self-Custodial Wallets and Services

How does OTC crypto trading work?

Before OTC trades can occur, some KYC procedures must be followed. After that, trades generally begin by virtually coming to the trading desk via phone call, portal login, or form submission. You outline the amount of cryptocurrency you would like to buy, sell, or trade during this step. 

Next, you must submit the funds for the trade, which is typically done via wire transfer. 

Once funds are collected, your cryptocurrency is deposited directly into your crypto wallet. 

What is CoinFlip Trade Desk?

Trade Desk is CoinFlip’s OTC trading experience that pairs you with a personal account manager to help you through the onboarding process and answer any questions. Our account managers ensure that you are always getting competitive prices and avoiding the unnecessary fees charged by our competitors. 

In addition to a personalized account manager, Trade Desk clients have access to CoinFlip’s award-winning 24/7 customer support. 

Unlike other crypto OTC services that require minimum trades of 20 BTC or higher to start trading, CoinFlip Trade Desk has no limits to the amount you can trade, allowing investors at all levels to enjoy the benefits of OTC crypto trading.  

Register for Trade Desk today to start making OTC trades with one of the leading names in the crypto space.