When Vakanda Investments decided to diversify their ₦5 billion treasury beyond stocks and bonds, they decided that bitcoin was the obvious next move.
The investment committee had done their research. Bitcoin (BTC) has outperformed most traditional assets over the past decade. Their high-net-worth clients were asking for crypto exposure. The fundamentals made sense.
But there was a problem: How do you buy ₦500 million worth of Bitcoin without moving the market?
If they placed that order on Quidax or any public exchange, the price would spike before they could fill half the order. They would pay millions more than the current price. Worse, every trader watching would see that a major player was accumulating Bitcoin. The strategy would be compromised before it even began.
For a retail investor buying $500 of Bitcoin, the order book on an exchange is perfect.
But for institutions or high-net-worth individuals, looking to buy $200,000 or more, large trades will heavily impact an asset’s price.. That’s where Over the Counter (OTC) crypto trading comes in.
What Is OTC Crypto Trading?
Before we talk about crypto specifically, let’s understand what OTC trading actually means.
OTC (Over-the-Counter) trading is a method of trading assets directly between two parties, without going through a centralized exchange or public marketplace.
The term comes from traditional finance, where it originally described securities that were literally traded “over the counter” at dealer offices, rather than on formal stock exchanges like the New York Stock Exchange (NYSE) or Nigerian Stock Exchange (NGX) . Today, it refers to any direct negotiation between buyer and seller that bypasses public exchanges.
In traditional finance, OTC markets handle:
- Corporate bonds
- Derivatives
- Foreign currencies
- Unlisted stocks
- Large block trades
The key characteristic? Privacy and customization where trades happen bilaterally, prices are negotiated privately, and terms can be tailored to both parties’ needs.
So for OTC crypto trading, it is the same scenario.
Instead of posting orders on an exchange’s order book where everyone can see them, OTC crypto trades happen privately through specialized desks or brokers. The buyer and seller negotiate a price, agree on terms, and execute the trade directly.
Think of it like the difference between buying a house at auction versus negotiating privately with the seller. At auction (public exchange), everyone sees your bids and competition drives up prices. In a private sale (OTC), you negotiate directly, maintain privacy, and structure the deal however you want. All done through an OTC Desk
OTC Desk
An OTC desk is a specialized trading firm or division that facilitates large, private transactions between buyers and sellers outside of public exchanges.Think of it as a broker or intermediary that connects institutional and high net worth buyers and sellers.
What an OTC Desk Actually Does:
- Matchmaking: They connect buyers who want to purchase large amounts of stablecoins or crypto with sellers (or vice versa).
- Liquidity Provision: They maintain their own inventory of digital assets (Bitcoin, USDT, etc.) so they can sell immediately when clients need to buy, or buy immediately when clients need to sell.
- Price Discovery They quote prices based on current market conditions, their fees, and the trade size—essentially acting as a market maker for large trades.
- Trade Facilitation: They handle the entire transaction process: negotiation, settlement, custody coordination, and compliance.
- Risk Management: They take on the risk of holding inventory and managing price volatility between buying and selling.
Quidax OTC desk enables businesses and high net worth individuals to trade $100,000 or more and get settled in local currency or USDT directly to a bank account or digital asset wallet address.
Here is how OTC Crypto trading works
Here’s the typical flow:
- Quote Request: The OTC desk (in this case Quidax) provides a price based on current market liquidity, trade size, settlement method, and prevailing market conditions.
- Price Discussion: For larger trades, there may be some discussion around pricing depending on liquidity conditions, timing, and the client relationship.
- Trade Execution: Once both parties agree on price and terms, the trade is confirmed and locked.
- Settlement:The agreed settlement method is then carried out, typically via delivery versus payment (DvP), pre-funded settlement, or wallet transfers. Crypto is delivered to the buyer and fiat is transferred to the seller, often within the same day depending on the settlement rails.
Reasons Why Institutions and High Net Worth Individuals use OTC Desks
Institutions and High Net Worth Individuals execute large trades via OTC desks for different reasons:
1. To avoid Market Impact and Slippage
When you place a $50 million buy order on a public exchange, you consume the entire order book at multiple price levels, driving the price higher with each fill.
For example, One Bitcoin is trading at $100,000 and you want to buy $10 million worth (100 BTC).
On a public exchange, you might pay:
- First 10 BTC at $100,000
- Next 20 BTC at $100,200
- Next 30 BTC at $100,500
- Final 40 BTC at $100,800
- Total cost: $10,051,000 (Average price: $100,510)
Through OTC:
- Negotiate $100,100 for all 100 BTC
- Total cost: $10,010,000 (Average price: $100,100)
The OTC trade saves you $41,000 and without moving the market price. For multi million-dollar trades, this difference becomes massive.
2. For Privacy and Information Security
When institutional wallets start buying large amounts on public exchanges, the entire market notices. Order book data is public. Blockchain transactions are public. Within minutes, traders front-run the orders and prices get pushed higher.
OTC trading solves this. The trade happens off-line or through private settlement.
3. For Regulatory Compliance and KYC
Institutions need robust Know Your Business (KYB) and Anti -Money Laundering (AML) procedures, counterparty due diligence, audit trails, and regulatory reporting capabilities. OTC desks are set up specifically for institutional compliance with rigorous verification, regulatory expertise, proper documentation, and custody integration.
4. Customized Settlement and Support
OTC trading allows customization: settlement timing over multiple days, specific delivery locations, various payment methods, and sophisticated price structures.
When you are trading large orders running into millions of dollars, you want a dedicated account manager and 24/7 support and not a support ticket system.
Experience seamless business payment with Quidax OTC Desk. Trade more than $200,000 with our Over-the-counter (OTC) desk and get settled in the local or international currency you choose or in stablecoins (USDT or USDC) directly into your wallet.
Get in touch with Quidax OTC Desk
