Over-the-counter (OTC) crypto trading refers to buying or selling digital assets directly with another party, rather than placing an order on a public exchange. Two sides agree on the asset, size, price, and settlement details in private, usually through a broker or an OTC desk. This setup enables large buyers and sellers to transact size with price certainty and with less attention from the broader market.
As you read through this guide, you will learn how an OTC trade begins, how it is priced, how it settles, and how to select a reliable provider. You will also see the risks, the paperwork, and the best practices that keep trades smooth.
How an OTC trade works from start to finish
An OTC trade usually begins with an inquiry. A buyer or seller reaches out to one or more dealers and requests a quote that specifies the asset, the side, the notional amount, and the preferred settlement window. Dealers respond with a firm or indicative price that reflects their inventory, current volatility, and hedging costs. The client compares quotes, asks clarifying questions, and accepts one of them.
Once the price is accepted, both sides start onboarding and compliance. They share KYC documents, pass AML screening, prove address ownership, and confirm source of funds. Institutions often add corporate papers and sign a master agreement that sets governing law and dispute handling.
After completing KYC, they confirm wallet addresses, chains, bank coordinates, stablecoin rails (if needed), and who covers the network fees. If the token is multi-chain, you choose the chain together and verify tags or memos where required. They also agree on timing, for example, immediate delivery or a scheduled window later in the day.
Settlement comes next. Some trades use a small test transfer, then deliver the full amount after confirmation is received. Both sides store on-chain transaction IDs or SWIFT references, update positions and P&L, and prepare accounting entries and any required regulatory reports.
Where OTC trading happens
Over-the-counter crypto trading is facilitated in various online and offline platforms such as:
Principal dealing desks
These desks use their own balance sheet. They quote two-way prices and may take inventory risk for a short time, then hedge in the background across venues. Clients see a single clean price and a clear settlement plan.
Agency brokers
Agency models do not take principal risk. They source liquidity from multiple dealers and exchanges, aggregate quotes, and charge a transparent fee or spread. OTC crypto trading services can enhance price discovery for clients seeking competition among liquidity sources.
P2P marketplaces
Peer-to-peer platforms list offers from many counterparties and handle escrow and dispute processes.
Prices are visible on the platform, which facilitates discovery, while users still need to assess counterparties and payment risks.
On-chain RFQ and DeFi OTC
Some protocols allow off-chain negotiation with on-chain settlement through smart contracts. This approach maintains pricing confidentiality during negotiations while providing programmable settlement conditions.
OTC vs crypto exchanges vs P2P marketplaces
OTC crypto trading shines when you want to move size with certainty and keep a low profile. You get a negotiated price and a dedicated settlement plan. Crypto exchanges are suited for smaller or frequent orders and automated strategies that benefit from public liquidity and programmable APIs. P2P marketplaces cater to users who prefer local payment methods and visible offers from multiple counterparties, provided they are comfortable evaluating reputations and adhering to escrow rules.
Common use cases
Institutions often accumulate or dispose of prominent positions through OTC crypto trading desks to avoid chasing prices across the order book. Corporate treasuries convert fiat to stablecoins for payroll or vendor payments and rebalance between tokens and cash on a schedule through OTC trading. Token foundations plan liquidity for vesting or market support and may stage deliveries with lockups. Cross-border conversions also benefit from OTC, as desks can align fiat windows across time zones and coordinate delivery on-chain.
OTC crypto trading advantages and risks
Price certainty for large orders facilitates budgeting and treasury management. OTC also offers discretion, as identities and timing remain private between you and the desk. Operational flexibility is another benefit. Desks can deliver to multiple wallets, handle split settlements, or align on specific fiat rails and time zones. When you need speed, dedicated coverage helps with address validation, test transfers, and troubleshooting.
OTC crypto trading offers numerous advantages, but it also carries risks. A trade relies on both sides performing, so professional desks reduce risk using staged delivery, escrow, or delivery-versus-payment arrangements. Operational errors can also bite. Incorrect addresses, incorrect chains, missing memos, or insufficient confirmations can cause delays and losses. Finally, rules differ by country. Licensing, reporting, and travel-rule obligations vary, so both parties confirm they can trade and settle the assets legally.
