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As the crypto world is growing, exchanges that deal with crypto are becoming more centralized. These exchanges are usually the most secure ones and for those who want to trade with crypto, it has become hard to do easily without them.
Because of this, traders started to look for exchanges that let them trade in high quantities and with anonymity. These exchanges are called "over-the-counter" (OTC) crypto exchanges. They act as brokers who facilitate large transactions in a short period of time while offering high-quality services.
Crypto OTC exchanges or crypto trading desks, work exactly like OTC brokers dealing with stocks. These exchanges allow traders to trade assets in high quantities.
These exchanges also offer some levels of privacy for those institutions and high net-worth traders who are looking for high liquidity and privacy.
Anyone can place a large order on an exchange, and it will eventually be executed. So why do we need these OTC exchanges if we can already purchase these high quantities of crypto in a regular market? The answer to that question is slippage. Slippage is the price movement of the asset while the trade is being executed. So if we want a choose an amount of Bitcoin and try to purchase it from regular exchanges, it is likely that the final amount will differ from our initial order. OTC exchanges provide us with opportunities to trade high quantities of crypto with spot prices.
"The OTC space is still as relevant for those smaller orders of individual investors as it is for the large volume orders" - Dr. Prash
These exchanges have really high liquidities and networks of buyers and sellers. This is what gives them opportunities to provide these high-end services.
Founded in 2013, ItBit is a well-known crypto exchange. This is a US-based Bitcoin exchange that provides Bitcoin for small and big investors.
ItBit Institution is for big and small institutional investors and is a full financial service company that helps them trade with Bitcoin. The Institutional Client Group has personalized services for institutional and small traders.
ItBit OTC exchange deals with $100,000 Bitcoin trades or more. They provide personalized services for these traders, give them lower fees, and execute deals faster. ItBit OTC exchange has competitive prices and fees. Combine this with the fact that it is a regulated US exchange, and it becomes one of the most trusted exchanges out there today.
San Francisco-based crypto exchange Kraken was founded in 2011 and is one of the most reputable crypto exchanges in the world. OTC services became available on Kraken in 2018. Kraken OTC exchange supports over 45 cryptos and is easy to access. Because of this, it has become one of the best places to visit if we need to use OTC services.
Kraken is trying to develop and expand its services each day. Just recently, in a massive expansion operation, Kraken has purchased Bit Trade and Circle Trade. These are both standalone OTC exchanges. Here you can find cryptos such as Bitcoin, Ethereum, and Monero. When it comes to payment methods, traders can trade using a huge variety of fiat currencies such as USD, CAD, GBP, EUR, and YEN.
The minimum transaction for OTC services on Kraken is $100,000. But for such a huge trade, you receive one-on-one services and don’t have to pay any fees.
SFOX, which stands for San Francisco Open Exchange, is a trading platform that supports Bitcoin OTC trading. It has really great liquidity and has received a huge amount of funding from big venture capitalists.
SFOX also has a huge selection of trading algorithms. It makes flexible trading with great speeds. Fees on these algorithms are not high as well, and if you trade more than $10,000 you receive even bigger discounts on them.
The company combines more than 20 exchange providers, liquidity, and OTC providers, and has one of the best prices for OTC Bitcoin trading.
I don't think we need to make any introductions for Binance, as it has already attained the status of the world's largest crypto exchange. Binance provides OTC services for high net-worth traders and corporations. These OTC services are provided for many different cryptos, including Bitcoin.
Binance also supports OTC trading. This OTC trading platform supports a huge variety of crypto-to-crypto trading pairs and has great liquidity. In total, Binance OTC supports more than 75 cryptos and tokens.
Unlike some other OTC exchanges, which have high minimums, with Binance OTC you can start using their services with just $10,000. These give opportunities to smaller investors to receive one-on-one personalized trading support and fast transaction executions.
Cumberland Mining is a part of DRW, which is a diversified trading firm. This exchange has been dealing with cryptos since 2014.
If you are an institutional-sized investor, Cumberland mining will offer competitive prices on large-size Bitcoin transactions. They are also liquidity suppliers for some other big crypto exchanges.
On Cumberland Mining, you will be able to find cryptos such as Bitcoin and Ethereum among many others. Trading here can be done in both crypto-to-crypto and crypto-to-fiat.
But one downside is that this is only tailored for big institutional traders. The minimum amount needed to use their OTC services is $100,000.
Genesis is a trading firm for institutional traders. They offer liquidity for cryptocurrencies such as Bitcoin and Ethereum. They have a really great history, as since 2013 they traded more than 1,500,000 Bitcoins and have completed thousands of transactions in total worth more than $600 million.
Genesis' services certainly don't come cheap, but they are not as high as some other OTC exchanges. To receive Genesis services your trade should be a minimum of $75,000. As we said they have a clean and good history. This resulted in them being regulated by FINRA and the SEC. They also have just applied for a Bitlicense in New York.
Canadian exchange Satsreet is considered one of the largest digital currency brokerages. They have a lot of security standards and are being regulated by Canada’s National Financial Transactions Agency, FINTRAC, and have a money business license.
They are relatively young on the market, only launching in 2020. Despite that, with their security and quality of service, they have already attracted large numbers of traders and have over $300 million in trading volumes. Bitcoin mining firms, traders with high net worth, and big institutions have all used Satstreet services. They are in partnership with crypto giants such as Coinbase, Silvergate, and Ledger. Their minimum requirement to use their services is also relatively low at $25,000.
Satstreet wants to position itself as a private cryptocurrency bank. They are on the right track to achieving this status, as more and more traders and corporations are starting to use their services.
FalconX, which was founded in 2018, operates slightly differently from the aforementioned OTC exchanges. They only provide services for institutions, meaning that retail investors can't use their services, even if they meet the minimum requirements for trade size.
This might seem like a limit placed on FalconX by itself, but working only with institutional investors has proved very successful for the company. They are working with over 100 financial institutions. Their client base includes hedge funds, payment gateways, crypto miners, property trading companies, other OTC desks, and crypto exchanges.
FalconX is focused on providing the best services, with competitive prices, and no slippages. They are doing this with the help of an unbelievably talented support team, who are available 24/7. This success can be easily seen, as their monthly trading volumes have reached over $10 billion.
In order to receive the services of FalconX, traders should have at least $10 million worth of assets under management.
Yes. OTC exchanges are safe and tend to execute transactions within minutes. But we still need to check out these exchanges extensively and learn more about them before trusting them with our money.
Crypto OTC exchanges don’t have any fees associated with transactions. To make money they have to add a small margin on top of the assets.
Crypto OTC exchanges have high liquidities that help them to facilitate big transactions. When a person makes an OTC transaction order, they have to meet some minimum trade size requirements. If this requirement is met, they will be contacted by the support staff of an OTC exchange, which will help them execute the transaction within minutes.