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What is Crypto OTC Trading and how does it work?
Explore how crypto OTC trading supports high-volume transactions and delivers key benefits across multiple use cases.
Written by
Conduit
Published on
January 20, 2026
Explore how crypto OTC trading supports high-volume transactions and delivers key benefits across multiple use cases.
Over-the-counter, or OTC Trading, is a well-known term in corporate finance, especially when there is a need to transact large volumes of international fiat currencies. Among the main benefits of this practice are volatility control and liquidity provision, while also serving as a flexible alternative to traditional exchanges, making it a relevant option for institutions, hedge funds, and traders.
The process works as a direct trading method where buyers and sellers negotiate prices between themselves instead of using public exchange order books.
This practice has also been incorporated within the cryptoasset ecosystem. Crypto OTC provides these core benefits and lets participants trade substantial amounts of cryptocurrencies without affecting market prices, giving traders more control compared to exchange-based alternatives.
Industry data shows that crypto OTC trading volumes grew by more than 100% year over year in 2024, reflecting a significant increase in institutional participation in the over-the-counter market. This approach is particularly beneficial for companies that need to move large volumes of fiat currencies, as it allows these flows to be combined with fiat-pegged stablecoins, such as USDC and USDT, as part of the settlement process, unlocking additional operational efficiencies.
In this article, we will explain how crypto OTC trading works, outline the most common use cases, and highlight the advantages of this approach. We will explore:
Crypto OTC (Over-The-Counter) trading allows buyers and sellers to make direct transactions outside public cryptocurrency exchanges. The trades happen in a private marketplace between parties without using public order books, unlike standard retail platforms.
Specialized intermediaries called OTC desks, brokers, or peer-to-peer platforms form the backbone of crypto OTC trading. These services help buyers and sellers negotiate directly and create a well-laid-out process that will give a fair price and a smooth transaction. An OTC trade follows several steps: parties ask for quotes, negotiate terms, execute the trade, and complete settlement.
The main difference between OTC and exchange trading lies in how they operate. Public exchanges show all transactions on visible order books where prices change based on up-to-the-minute supply and demand, while OTC deals stay private with no public visibility.
OTC transactions also offer:
OTC trading's most important benefit is preventing possible market disruption. Large orders on public exchanges can drastically affect prices as they use multiple price levels, and this is called slippage. But with OTC channels, even big transactions happen at agreed prices without causing market volatility.
The main users of OTC trading are participants who typically operate large volumes for a variety of purposes, such as:
Institutional Investment: Hedge funds, asset managers, and venture capitalists.
Wealth Management: High-net-worth individuals who want discretion when adjusting their portfolios often use these services, and family offices that manage large assets are among other users.
Crypto Mining Operations: Mining firms that need to liquidate mined assets at scale without impacting market prices.
Treasury Management: Companies and startups managing funds and raised capital, corporate treasurers, and payment processors find the practice useful.
These groups handling large-scale transactions get great benefits from OTC trading's privacy, liquidity access, and minimal market impact.
The mechanics of OTC trading follow a well-laid-out workflow that provides secure and quick transactions for large cryptocurrency volumes. The process follows these steps:
A trader starts the OTC process by reaching out to an OTC desk to buy or sell cryptocurrency. The trader needs to share details about the type of cryptocurrency (such as BTC, ETH, or stablecoins), volume, and how they want to pay. Traders can get quotes through different channels, directly reaching with dedicated traders or using automated Request for Quote (RFQ) systems. Most deals start at $50,000, but OTC desks usually handle much larger amounts.
The real work begins after getting the quote. OTC desks set their prices based on market conditions, available liquidity, and order size. Quotes usually come with time limits, and once agreed, the price remains fixed regardless of market fluctuations.
The OTC desk locks in the trade once both sides agree on terms. Principal desks use their own resources to complete the deal, while agency desks connect buyers with sellers. Settlement can happen in different ways. Settlement can occur immediately or through “delayed settlement” models, which consolidate multiple trades into a single daily process. At the end, both parties confirm the transfer of assets.
Many OTC trades use escrow services or third-party custodians to boost security. These middlemen keep assets safe until both sides meet the agreed conditions. Some platforms also use multi-signature wallets and advanced custody solutions to protect funds during trades, creating an extra security layer against market disruptions.
The crypto OTC ecosystem includes different types of platforms, each designed to meet the specific needs of institutional investors and high-volume traders.
The main difference between principal and agency desks comes down to risk and capital use. Principal desks use their own money to fill client orders, which means they take on market risk directly, and they give quotes based on market conditions when receiving a purchase request.
Agency desks, all the same, work by linking buyers with sellers without putting up their own funds. They make money through brokerage fees when they match trading parties successfully. Principal desks usually execute trades faster with fixed pricing. Agency desks might give better prices but take longer to process trades.
These platforms act as specialized intermediaries, connecting large-scale buyers and sellers. They offer fast execution, customized services, market insights, and flexible settlement options, typically completed within 24 hours. They are aimed at institutional clients seeking dedicated support.
P2P platforms allow traders negotiate with each other directly without middlemen. These services use escrow systems to secure transactions and appeal to users seeking privacy and flexibility in payment methods and trading terms. These platforms are a great way to get customized trading, but might need extra security checks compared to broker options.
Anyone looking to trade large volumes of cryptocurrency through OTC trading platforms should understand both the benefits and considerations of this practice.
Privacy is a core characteristic of OTC trading. While public exchanges display transactions on visible order books, OTC trades are conducted off-market, keeping sensitive details private. This discretion is particularly valuable for institutional participants, as it helps avoid market volatility and can protect trading strategies and financial information from unwanted exposure.
OTC desks provide access to deep liquidity pools, enabling the execution of large-volume trades with minimal market impact, which is especially important for institutional investors entering or exiting significant positions.
Crypto OTC trading also benefits from blockchain-based settlement mechanisms. Transactions settled on-chain can offer faster and more predictable finality compared to traditional financial infrastructure, as they are not constrained by banking hours or correspondent networks. On-chain settlement additionally provides verifiable transaction records, supporting reconciliation and audit processes, while reducing reliance on multiple intermediaries. When combined with stablecoins, blockchain settlement can further enhance liquidity management and reduce settlement risk in cross-border transactions.
Despite its advantages, OTC trading involves risks, particularly related to counterparty exposure and regulatory complexity. Because transactions occur outside centralized clearing systems, participants must rely on the credibility and controls of the OTC provider. Regulatory frameworks also vary by jurisdiction, making due diligence, compliance checks, and counterparty verification essential components of any OTC trading strategy.
Conduit provides a stablecoin-powered OTC infrastructure designed for businesses managing large-volume transactions in multiple currencies. Our OTC workflows are built with robust compliance standards, including KYB processes, counterparty verification, and risk controls, allowing companies to access liquidity efficiently while maintaining regulatory alignment.
Ideal for treasury management and cross-border operations, Conduit’s OTC solutions enable organizations to convert and settle volumes with greater predictability and speed. Businesses can operate with confidence, using this solution as a reliable extension of their existing financial operations.
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