The ABCs of OTC Trading

abcs og OTC trading

What Is OTC?

The OTC meaning comes from “Over-the-Counter,” which means “bypassing the market.” OTC is a transaction with a financial instrument, such as cryptocurrencies or shares, that requires no exchange as an intermediary. Traders on the stock market often encounter this practice. Prominent market participants conclude a transaction directly or by asking organizers, ensuring the stakeholders’ mutual fulfillment of obligations.

What Is OTC in Stocks?

Trading securities not listed on a recognized exchange, such as the New York Stock Exchange, is known as OTC trading in the stock market (NYSE). Such equities cannot be listed on a regular exchange.

They are traded via the Over the Counter Bulletin Board (OTCBB) or Pink Sheets listing service in Western nations. OTCBB is a platform for electronic trading and quotations that fosters greater information exchange and liquidity. On the other side, Pink Sheets is a private organization that collaborates with broker-dealers to get the stocks of small companies ready for the market.

The OTC Meaning in Crypto

For a long time, OTC trading has been an essential tool in the traditional financial market, but in 2018 it also found wide application in digital currencies. Since then, crypto people have started to learn what is OTC trading in crypto. Such transactions have long been the domain of big players and “whales” there, but some factors have influenced the recent increase in interest and broader acceptance of OTC in the industry.

Mainstream cryptocurrency exchanges are now known for their extensive support of little transactions. Over-the-Counter trading services are starting to actively occupy the niche of average market participants with orders of $100k and above. It is especially relevant given the complexity of depositing and withdrawing fiat funds from exchange accounts and the ever-changing regulatory framework.

What Is OTC Trading, and How Is It Different From Exchange Trading?

A significant transaction on an exchange typically includes numerous smaller transactions, and the rates in each may differ. The number of transfers required and the spread of rates depends on the current liquidity and volatility. Typical digital currency market price volatility can drastically raise trading expenses and harm market players.

Customers that engage in OTC trading are restricted to a single, sizable transaction, which boosts efficiency and eliminates the complexity of execution across exchanges. A higher level of anonymity is also made possible because the transaction is not listed in the platform’s order book and is not made available to the public.

What Is OTC Market in the Context of Financial Assets?

Now, let’s learn what is OTC market. It is a form of relationship between buyers and sellers of any financial assets when transactions are made without exchange platforms. OTC platforms are usually used for large transactions.

Although there are differences between OTC and major exchanges, investors should not experience significant differences when trading. A financial exchange is a regulated, standardized market that is considered safer. It can also be viewed in terms of faster transactions.

How Are Crypto OTC Transactions Conducted?

More often than not, transactions follow three scenarios:

  • The trader is entrusted with assets, which they sell through exchanges depending on the volume.
  • A crypto OTC desk (a company engaged in such trading) takes over the sale of a large volume of assets and immediately calls the price on it, taking risks and conducting the transaction from its balance sheet.
  • Another possible scenario is when a large buyer and seller meet on the same floor and want to make a deal at a price higher or lower than the market.

As for the crypto world, OTC crypto trading has primarily interested those willing to sell large volumes of coins, like successful miners and crypto investors. But everyone else can also learn what is OTC and trade with favorable rates.


OTC trading has its significant upsides.

  • Lack of restrictions. The OTC market implies a high entry threshold for investors, so there are no traditional restrictions inherent to exchanges to exchange and withdraw assets. Therefore, traders can trade crypto at one time for the maximum amount available or offered by a broker.
  • High level of security and transparency. When large amounts are involved in the game, it is necessary to provide appropriate security to preserve investors’ assets. Besides, brokers must comply with KYC/AML policies to discourage money laundering and turnover of criminal funds, which can affect honest investors.
  • High liquidity. The OTC market provides opportunities on how to buy large amounts of Bitcoin at one price and one order.
  • The ability to buy cryptocurrencies for fiat directly. Many crypto exchanges do not provide the opportunity to buy crypto for fiat or offer a limited selection of currencies. Usually, you need to purchase the digital coins outside of the exchange and then withdraw them to a wallet, which is also not safe. However, cryptocurrency goes straight to a wallet, where it is safely stored.


There are also some risks associated with OTC trading.

  • It takes time to buy or sell cryptocurrency. Large transactions will take some time to find a counterparty. In some cases, it may turn out that some brokers cannot supply the necessary amount, and in others, it may take more than the investor has available to buy.
  • There may be a small selection of cryptocurrencies for large transactions. Only 12 cryptocurrencies have a capitalization of more than $1 billion, and the amount of funds involved in trading is even smaller. Therefore, vendors cannot provide the necessary amount of coins for some cryptocurrencies except for BTC, ETH, XRP, LTC, or Litecoin.
  • Rates. Direct purchase from counterparties occurs at a less favorable rate than on exchanges or is accompanied by higher fees. But some platforms offer a fair pricing policy.
  • OTC trading is only suitable for long-term investments. The reason is simple: you cannot quickly find buyers and sellers to make many trades for profit in one or more days. Besides, there is mostly no way to automate the trading process that crypto exchanges provide.

How To Choose an OTC Trading Provider?

OTC firms provide solutions to liquidity, pricing, and information problems. This focus on providing a single price or solution and working individually with each client creates a customer-centric environment that allows the service to expand in new directions, from escrow to credit to syndication. The best OTC providers adapt to emerging and uncertain markets, balancing confidence and humility to offer their customers consistently competitive services and liquidity.

A critical factor in comparing providers should be their ability to transact in fast-growing markets defined by high volatility, little liquidity, and algorithmic trading prowess.


OTC trading is not for everyone. Many regulatory bodies warn that such trading activities may be fraudulent, and there are few reliable Over-the-Counter solutions. But if you can be patient, disciplined, and open to learning something new, you will benefit significantly from such trading. The only thing is to find a trustworthy platform that allows trading crypto with no exchange limitations and high liquidity (for example, Kuna OTC). It will help to trade safely.


What Is OTC on Kuna?

Kuna crypto OTC trading platform is a unique service, which means the direct over-the-counter trading of virtual assets with our clients on a principal-to-principal basis. You can access companies and high-net-worth individuals to trade with us directly according to their request.

Why Do People Buy Bitcoin OTC?

Market participants can abandon traditional exchanges in favor of OTC for some reasons, including price stability, speed of execution, security, and confidentiality. Professional and prominent investors use these features as a reference to find a solid OTC platform.

Is OTC Trading Better?

The open outcry technique uses a physically present exchange, which is one of the critical distinctions of traditional trading. In contrast, OTC has no physical site; all interactions occur online. Besides, there are fewer regulatory limitations.

What Are the Disadvantages of OTC Trading?

Large transactions will take some time to find a counterparty. In some cases, it may turn out that some brokers cannot supply the necessary amount, and in others, it may take more than the investor has available to buy. Sometimes, vendors cannot provide the required amount of coins for some cryptocurrencies except for BTC, ETH, XRP, or Litecoin.

Is It Safe To Buy OTC Stocks?

It is simple to purchase OTC stocks, but it is more difficult to determine whether doing so is safe. Some stocks are issued by speculative firms or even outright fraudulent enterprises engaged in pump-and-dump schemes. In contrast, certain stocks trade on the OTC markets with good intentions and might offer fantastic investment possibilities.

As long as you understand what is OTC and research the stocks that interest you, you can avoid scam projects and other bad investments and focus on finding solid long-term assets.