OTC trading, short for over-the-counter, means executing a trade directly between two parties rather than through a public order book. Large orders move prices, which is why it exists. A $50,000 market order on a thin book can cost 6% in slippage, and the same problem scales badly into the millions.
The problem OTC solves
Order books are shallow relative to institutional size, and the gap between what a desk absorbs and what a public venue absorbs at a stable price is wide.
Submit a large market order, and it climbs through successive price levels, each worse than the last. Visible while executing, it also lets other participants trade ahead of it. Both effects push the average price against you.
An OTC desk quotes one price for the entire block. Knowing the cost before agreeing is the point. The trade never appears in the public book.
How an OTC trade works
Five steps. Unhurried by design.
- You contact the desk with the asset, direction, and size.
- The desk quotes a price for the full amount.
- You accept or negotiate.
- Both sides complete compliance checks, which for large amounts means source-of-funds documentation.
- Settlement happens directly, typically same-day.
Note that the quote is firm for the whole block. Certainty of price on size is the core product, bought with a wider spread than the top of the order book shows.
The two desk models
Principal desks trade their own capital. Quoting you a price, they take the other side and manage the exposure. Execution is immediate and certain. The desk carries the risk.
Agency desks find a counterparty on your behalf and charge commission. No inventory risk for the desk. Less certainty on timing.
Most crypto OTC runs on the principal model, since immediacy is what clients pay for.
OTC vs exchange trading
| OTC desk | Exchange order book | |
|---|---|---|
| Price | Quoted for the full block | Discovered as the order fills |
| Market impact | None visible during execution | Direct, and larger with size |
| Slippage | None once quoted | Scales with order size |
| Minimum size | Typically six figures and up | Any amount |
| Speed | Hours, including compliance | Immediate |
| Counterparty | Known and contracted | Anonymous |
Who uses OTC and why
- Institutions and funds building or exiting positions too large for public books.
- Corporate treasuries allocating to Bitcoin as a balance sheet asset.
- Miners selling production regularly without depressing the market they sell into.
- High net worth individuals entering or exiting in size.
- Early holders and project teams liquidating positions where a public sale would be visible and disruptive.
- Anyone needing settlement certainty more than they need the tightest possible spread.
The trade-offs
Here is what OTC costs you. Four things.
The spread is wider than the exchange's top of book. You are paying for certainty, and for the desk absorbing your risk. Comparing an OTC quote against the exchange's best bid ignores what filling your entire size on that book would actually have cost.
Counterparty risk is real. Trading with a specific entity differs from trading an anonymous book backed by exchange settlement. Which entity, and who regulates it, is the central question.
Compliance takes time. For large amounts, source-of-funds documentation is no formality, and that single step frequently determines whether settlement happens today or drags into the following week. No formality at all.
Price discovery is opaque. Never appearing in public trading data, OTC volume means published trading volume figures understate how much of a given asset actually changes hands in a day. Opaque by design.
What to check before using a desk
- Regulatory status, verified on the regulator's own public register rather than the desk's website.
- Whether the desk is principal or agency, since it changes who carries the risk.
- Settlement terms, including timing and what happens if one side fails to deliver.
- The all-in price, compared against the realistic cost of filling the same size on an order book rather than against the top-of-book quote.
- Whether client funds are segregated during settlement.
- Minimum size, which varies substantially between desks.
Trade OTC with mb.io
Large orders need a counterparty you can verify, and settlement you can rely on, which together make regulatory status matter more here than almost anywhere else in crypto. Verify both.
mb.io is a regulated crypto spot exchange backed by MultiBank Group, a financial institution founded in 2005 that serves more than 2 million clients across 100+ countries.
- Regulated by VARA in the UAE and AUSTRAC in Australia
- Institutional-grade MPC custody powered by Fireblocks, with segregated client funds
- 10/10 security score from Hacken, an independent blockchain security auditor
- Fiat on and off ramps supporting Visa, Mastercard, SWIFT, and PIX
- Buy, sell, and swap in three steps, from sign-up to purchase
- 24/7 multilingual client support
Open your account and start trading on mb.io.
Frequently asked questions
What does OTC mean in crypto?
Over-the-counter, meaning a trade executed directly between two parties rather than through a public order book. It exists to move large size without the price impact an exchange order would create.
What is the minimum for OTC trading?
Desks typically start in the six-figure range, though minimums vary considerably. Below that threshold, exchange order books are usually cheaper and faster.
Is OTC cheaper than an exchange?
The quoted spread is wider than the exchange's top of book, and on large size it frequently costs less overall because it avoids slippage. The correct comparison is against the realistic cost of filling your full size on the book.
Why does OTC not move the market?
Because the trade settles directly between two parties rather than consuming resting orders in a public book, it does not appear in exchange price data while it executes.
Is OTC trading anonymous?
No, and the opposite is closer to true. Both parties complete compliance checks, and large trades require source-of-funds documentation. It is private from the market, not from the regulator.
What is the difference between a principal and an agency desk?
A principal desk trades its own capital and takes the other side of your trade immediately. An agency desk finds a counterparty for you and charges commission, with less certainty on timing.
Does OTC volume show up in market data?
Generally not, which means published volume figures understate actual market activity. This is one reason exchange volume alone gives an incomplete picture of real trading.
What are the risks of OTC trading?
Counterparty risk is the main one, since you are trading with a specific entity rather than an anonymous book. Verifying the desk's regulatory status and settlement terms is the practical mitigation.
