Over-the-Counter (OTC)

An OTC trade is negotiated privately rather than matched against a public order book. Instead of submitting an order that fills incrementally against visible bids and asks, the buyer and seller agree on a single price for the entire size upfront, usually through a request-for-quote process with a specialized desk.

The core reason OTC exists is price impact. A public order book only has so much depth at any given price; a multi-million dollar order dropped straight onto an exchange would eat through several price levels and move the market against the trader before the order even finishes filling. OTC desks avoid this by quoting one all-in price, often sourced from their own inventory or a network of liquidity partners, and settling the trade off the public tape.

Institutional OTC desks such as Cumberland, Wintermute, B2C2, and Galaxy Digital act as principal market makers on the larger, more liquid trades, warehousing risk and hedging it across venues. Minimum sizes typically start around $100,000 to $250,000, though some platforms accept smaller tickets. Clients go through KYC and onboarding before trading, and settlement is increasingly handled through a custodian or, for near-instant transfer, in stablecoins rather than a slow bank wire.

Because trades are bilateral, counterparty risk is the main hazard: a desk or trading partner could fail to deliver funds or assets. This risk has fallen as custodial settlement and pre-funded accounts have become standard, but during extreme volatility some desks have historically paused quoting altogether rather than trade blind.