Over-the-Counter (OTC)

Over-the-Counter (OTC) trading refers to buying or selling cryptocurrency directly between two parties, rather than placing orders on a public exchange order book. OTC deals are typically arranged through an OTC desk, broker, or private counterparty, allowing the buyer and seller to negotiate the size, price, settlement method, and timing of a transaction.

In an OTC trade, a participant requests a quote for a specific amount of an asset, such as Bitcoin or Ethereum. The OTC desk sources liquidity, agrees on a price, and coordinates settlement. Settlement can be done by transferring crypto on-chain to a specified wallet and paying in fiat via bank transfer, or by swapping crypto assets directly. Because the trade is executed off-exchange, it does not appear on a public order book in the same way as a standard exchange market order.

OTC trading is commonly used by institutions, miners, funds, and high-net-worth individuals who want to transact large sizes without causing noticeable market impact. On a public exchange, a large order can move the price as it “walks the book,” and it can alert other traders to unusual demand or supply. OTC trading can also offer more flexible settlement terms, tailored compliance and reporting, and relationship-based execution. That said, OTC participants still face risks, such as counterparty risk, settlement delays, and the need to verify the credibility and regulatory posture of the desk or broker.

A fund rebalancing a portfolio or a company converting treasury holdings may prefer an OTC desk to execute a large trade quietly and efficiently. Understanding OTC matters in crypto because it represents a major channel of liquidity and helps explain how large players trade without relying solely on public exchanges.