The crypto asset market is growing stronger over the course of each year. Why is it growing in such a manner? The answer is that established companies and corporations across the world from countries such as Japan, China, Estonia, the United States, and even the United Kingdom have stepped into the digital asset sector to help it grow.

Cryptocurrency markets will evolve as more sophisticated entities step in from the traditional finance sector and pave the way for new jobs and forms of transaction. One way that these traditional market players are bringing about more access and trading of assets is through a mechanism known as over the counter trading. But what is this mechanism and why does it matter?

The simple answer is that it is present because it allows a wide variety of people to interchange copious amounts of digital tokens without identification. It is these two components that give it substantial value to parties who wish transact without trace. They may be wealthy individuals, entities such as large financial institutions, or other third parties that have a vested interest in opaque speculation.

Indeed, cryptocurrency markets are transforming and more people are gravitating to it. They seek to find different ways to get involved with their own criteria and make a significant impact on their lives.

The goal of this post is to provide you with a general understanding of the cryptocurrency markets and its relationship with Over the Counter trading. By the end of this post, you will comprehend what this emerging sector in digital assets is, why people prefer OTC, the advantages and disadvantages, the volume of transactions in the present and in the future, as well a keen understanding of those who transact therein.

Over The Counter In Traditional Markets

First, remember that the concept of OTC is not a new invention. But what is the idea of OTC? It is a method of how financial assets are interchanged for businesses that are not present on the regular places like the Nasdaq or the LSE. What makes over the counter markets interesting?

One point is that these transactions occur through broker dealer groups instead of a central location for speculation. What is more is that companies do not have to be in line with specific criteria to be traded in this manner. They would have to meet more stringent criteria to be present in a traditional centralized facilitation area.

In a traditional market, these non traditional transactions occur over the OTCBB also denominated as Pink Sheets.

But what is this OTCBB? It is an information entity and asset interchange platform where one can have a large volume of liquidity in addition to better distribution of facts and information. One can place their trades over the web or over a telecommunications device.

How does this translate to cryptocurrency markets?

OTC and Cryptocurrency

The same concept applies but in the digital asset world one will see that non traditional brokers will mediate between the acquirers and the divestor. The facilitator should search for and match two people who seek to make a similar transaction. As noted earlier, OTC allows for opacity and abstraction in identity.

Therefore, the OTC broker makes the trade as opposed to the parties involved. It helps to keep things simple and not unduly influence the markets. These transactions may not be visible like it is on traditional digital asset facilitator spaces. Lack of market disruption is crucial in maintaining stability.

The OTC Motive

The fact is that liquidity matters in the speculation environment. Guess what? It matters even more when one wants to move substantial sums of assets within one go. But it is a problem when one can not do this on traditional digital asset facilitation spaces.

These larger orders will take time to finalize on regular places and sometimes they might not get filled. What is a whale trader to do? Wait around and hope it happens in a timely and profitable manner? Hope it goes smoothly where there are no price leaks? That is not a sound strategy in the least bit.

They need another solution and these counter operators offer that ability to move substantial sums of assets without any issues. They offer a unique service and provide value to those who want to discreetly conduct market activity without drawing attention to themselves.

That is where OTC providers come in and state that they will meet demands and offer what is sought by the large speculator. All parties walk away happy with the deal. Moving the markets is the next concern. Say that someone wanted to move 2,000 BTC on Binance. That is something that would make others pay attention and cause a potential rally or a decline. Wise whales will opt for OTC providers to conduct these transactions to minimize market manipulation.

Further, centralized speculation locations will create more friction in execution because of limitations inherent to their platforms such as lack of government currency infusion. The broker dealer groups do not have these limitations because they match parties directly. They offer a seamless and frictionless experience that makes a difference for each party. That is why they exist and will continue to do so over the next few decades.

Who are Parties Involved in these Transactions?

The answer to this is fairly straightforward, it is people who have large pools of wealth or people who will manage money and assets for those who legally own that wealth. That is a significant value add for people who are transacting on behalf of themselves or on behalf of people who are wealthy. They can participate in emerging markets without letting other people know about their trades. This is valuable to people who are entering into markets that might be frowned upon like bitcoin was in 2011 or 2013.

Of course, there are those entities such as financial firms, hedge funds, and others who also participate in these markets. These individuals always move large amounts to gain the right profits. People may move more than $30,000 to $80,000 at a time. One might also notice that people like miners will come to these locations to place btc on to the public markets. Many groups that conduct these transactions are in Eur-Asia.

Which Brokers Are Involved in the Process?

There are many OTC institutions at the current moment within the digital asset industry. A few of these prominent ones include ones that are based in New York started by people such as Barry Silbert. Then there are platforms that are present and owned by people like the DRW Group, and others in Asia. Prominent institutions that people respect are a part of the process.

More trusted parties look like they will continue to expand into this area because it is lucrative and there will be more demand. They understand that more institutions and wealthy clients are looking for more gains and yield and will look to alternative assets such as bitcoin to quench their thirst for capital growth. As demand grows so will supply.

How Large Is This Segment of Cryptocurrency Trading?

It is hard to state just how large this sector is because of the fact that it is a very opaque market. We do know that many people with large portions of funds participate in the market and will do so regularly due to anonymity and security.

Are There Issues with Being A Speculator in the OTC Market?

The brokers in this equation have more work to do in the OTC environment. That means that people must pay attention to the competence and execution of the dealer network. There is more reliance on this third party to conduct settlement.

For instance, if you were to use Binance or another typical facilitator to conduct a transaction, you just make the trade and everything works out (depending on the size of the trade). The entity will make sure to conduct the calculations and send the funds to the appropriate parties.

But if you were going into the OTC environment, the broker dealers must conduct the transfers in a timely manner. You must wait on the facilitators to finalize the transaction. The right facilitators will make certain to verify the worthiness and legitimacy of the parties involved in the transactions.

Further, remember that these intermediaries want to uphold their reputation and may turn to more secure forms of fund transfer by using escrow features. The idea here is to minimize business risk and provide splendid experiences to consumers. People might also see some initial friction with the notion of international transfers and the legal aspects that relate to it.

How Do You Execute and OTC Transaction?

The process is quite simple. You will reach out to the broker or they communicate with you and ask if you are interested in processing transactions. You would state that you are interested in being an acquirer or a divestor of assets. A typical entity will make sure to conduct the necessary checks into identity and verify the person is who they say they are before proceeding.

The intermediary will seek out someone who is interested in being on the other side of the transaction. For instance, if you are a buyer, the third party must go in search of a seller of the same amount. The next component is where the two parties hash out details and terms of the deal. What are these details? They include size, price, and timing.

How do they take place? Intermediaries will facilitate online methods such as web messages or even through conference calls. The idea here is to beat the exchange costs and still have a large transaction go through and execute. What is even more interesting here is that these third party intermediaries will strive to charge less.

Now, the negotiation is over and each party must stick to their word. The purchaser will fund the transaction, the seller will move the asset into a secure account. There might be other guardians involved in the process to seamless conduct the deal. The parties walk away with their respective gains after the third party dealer gives them what they wanted. Settlements occur within a day to a month.


Should you take part in the OTC market? That depends on if you are a whale or not. Minnows, those that have less than $100,000 to play with in the markets should stick with pro trader or basic accounts. They do not have any real purpose in these above counter markets. They can just as easily speculate from the comfort of their accounts on Square or other brokers within the traditional speculation sector.

Of course, individuals do have the option of going through Localbitcoins or another service that helps people transact without an exchange. But this might be more of a hassle in some cases than using centralized exchanges. For instance, one might have to pay much more than the going rate on Asian and US speculation hubs. It may not make sense in many cases for a regular individual to use their version of over the counter.

Why take extra steps to open up an account with these broker dealer networks when you don’t have the right capital? Remember that many of these brokers expect you to have at least $100,000 or more to transact with in regular transactions and might make exceptions.

For those who do meet requirements or are a large member of the crypto realm, these vehicles may be the way to go because it helps them to conduct the right transactions. Most people who do take part in this realm enjoy their experience and are apt to come back.

Middlemen are present in the process and are useful if the situation calls for it. Remember that this option is there for you when you need it and you can improve your quality of transaction movement if you have a large portion of funds to allocate to the digital asset industry.