What is OTC Crypto Trading? A Beginner’s Guide


Understanding OTC Crypto Trading

Over-the-counter (OTC) Trading is a financial framework that enables trading markets outside a regular exchange. In OTC trading, a diverse network of crypto markets caters to buyers and sellers. OTC traders diligently seek favourable pricing to meet their clients’ needs, leveraging their expertise, interactions, and market insights to identify optimal trading opportunities. When buyers or sellers initiate orders, OTC traders work diligently to secure the necessary assets for successful transaction completion.

How OTC Differs from Traditional Exchanges

Traditional exchanges are organised and regulated markets, wherein trading takes place between buyers and sellers in a safe, transparent and systematic manner. Buyers buy directly from the sellers. The prices of tokens are market-regulated and are the same for everyone. In crypto, the transactions are transparent and can be seen by everybody on the network through a distributed ledger. Both buyers and sellers are dependent on each other. 

OTC, on the other hand, acts as a third party which has the network of both the buyers and sellers. OTC facilitates the transactions on behalf of the trading parties, thus the identity of traders becomes opaque to the ledger. This further strengthens the security. 

Crypto OTC Trading involves the direct exchange of crypto assets between two parties within a private trading environment. Unlike traditional exchanges with multiple listed prices, in OTC trading, participants have individual private prices and can negotiate transactions based on their respective asset quantities and desired purchase amounts. It’s akin to a scenario where two individuals engage in private trading discussions: one party is looking to sell assets at a specific price, while the other is interested in purchasing assets at a designated price.

Read more: Crypto Investing vs Crypto Trading

Different Types of OTC

Principle Desk

Engaging with principal desks or OTC trading markets involves utilising funds to acquire specified assets as per customer requests. This dynamic implies that the OTC trader assumes risk on behalf of their client during the transaction process.

Here’s the typical process: Upon submitting a request via a chat application, a market trader responds with a price determined by prevailing market conditions. Subsequently, as the customer, you have the option to decline, negotiate, or accept the offered price. Upon reaching a mutual agreement, the OTC trading market commits to delivering the asset as outlined in a legal agreement established during the onboarding phase.

Agency OTC

In contrast to Principal OTC trading markets, Agency OTC trading markets operate without using their funds, thereby avoiding market risk. In this model, customers pay a fee to the OTC trading market, enabling it to act as an intermediary on their behalf.

Advantages of Trading with an OTC Market Desk

Enhanced Liquidity: Liquidity stands out as a key advantage in over-the-counter trading, particularly in the realm of crypto where traditional exchanges may face challenges with low liquidity. OTC trading markets excel in executing large orders efficiently, reducing the risk of price fluctuations by offering the capacity to handle substantial crypto volumes.

Confidentiality: OTC trading markets operate on a one-to-one basis, ensuring transactions remain private and shielded from external interference. This inherent privacy feature minimises the exposure to third-party interventions, fostering a secure environment where customers can conduct transactions with confidence and peace of mind.

Direct Transactions: OTC trading markets facilitate direct transactions between buyers and sellers, eliminating the need for intermediaries and associated restrictions. This direct engagement mitigates the risks of fraudulent activities often associated with third-party involvement, commonly known as “plugs,” allowing buyers to establish a transparent line of communication and traceability with their sellers.

Read more: Crypto Trading Strategies

Is Crypto OTC Trading Platform Legit

It is easy to differentiate between legitimate OTC platforms and others. One of the key indicators of legitimacy for an OTC trading platform is the inclusion of a Know Your Customer (KYC) form as part of its customer requirements. When delving into crypto trading through OTC channels, it’s crucial to review feedback from past customers of an OTC enterprise to gain unbiased insights.


OTC trading platforms provide several advantages over traditional trading. Higher security to greater liquidity are important and inviting factors. It is especially useful for investors looking for comparatively bigger amounts to invest.

We suggest you be vigilant and do your research before picking a platform. Looking for reviews and KYC options should be given utmost importance. 

If you found this blog to be useful, do share it with other like-minded crypto enthusiasts. Click on the button below to begin your crypto trading journey using ZebPay.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

Start Trading Now