{"id":67741,"date":"2021-04-28T19:01:17","date_gmt":"2021-04-28T19:01:17","guid":{"rendered":"https:\/\/wp.dash.org\/?p=67741"},"modified":"2021-09-18T11:41:07","modified_gmt":"2021-09-18T11:41:07","slug":"what-does-a-cryptocurrency-otc-desk-do","status":"publish","type":"post","link":"https:\/\/wp.dash.org\/news\/what-does-a-cryptocurrency-otc-desk-do\/","title":{"rendered":"What does a Cryptocurrency OTC Desk do?"},"content":{"rendered":"
This article discusses how trading works for Over-The-Counter \u201cOTC\u201d digital currencies. We explore why, how, and when to hire a cryptos OTC desk. And, will go behind-the-scenes with Bea O\u2019Carroll, a top financial professional working in the space.\u00a0<\/i><\/p>\n
Decentralized trading OTC, means that an investor or seller is able to avoid (\u201cdivert\u201d) the traditional market counter. Between a crypto seller and a buyer, who wants to deal directly with each other, OTC cryptocurrency trades create temporary relationships. These relationships most often occur with assistance of a third-party service: a digital currencies (\u201ccryptos\u201d) OTC desk.<\/p>\n
An OTC desk for cryptos is a type of financial company that hires financial professionals to work exclusively with coordinating and managing digital asset transactions. OTC trades are already becoming known for providing cryptocurrency price stability, high-speed transaction execution, ultimate convenience, increased security, and confidentiality.<\/p>\n
While OTC trading of cryptocurrencies has been compared to do-it-yourself stock trading, the differences are clear. At-a-glance, a digital assets OTC desk is different from a traditional OTC desk because OTC desks are not required to work with a market representative to execute trades. This is not completely free of cost, since trading OTC still charges trading fees. But, OTC desks do not charge broker fees. When compared to traditional market trades, the 24\/7\/365 cryptos OTC trading experience offers superior market access and control.<\/p>\n
Other conditions of working with a cryptos OTC desk include:<\/p>\n
Liquidity and User Experience<\/b><\/p>\n
Exchanges are open marketplaces where trades of securities and other financial instruments occur. Securities are mostly traded on traditional exchanges. In cryptocurrency, exchanges mainly focus on trading cryptocurrencies which are evaluated by compliance officers and regulators on a project by project basis for a number of attributes including whether or not they are a security or utility. Many cryptocurrencies fall outside of the definition of securities, such as Dash. People working as dealers, investors, and brokers, are centralized in order to monitor markets. Including, to standardize buying and selling of instruments, and for fraud-prevention.<\/p>\n
OTC trades are a common tool in the traditional financial market, but different from trades on a stock exchange. To carry out a large trade on a traditional stock exchange, small transactions are required with varying rates. At the time of each small trade, the market\u2019s liquidity and volatility determine how many transfers are needed.<\/p>\n
Diving into the pool of opportunities and liquidity risks, meet Bea O\u2019Carroll. Bea is a US-based principal of an OTC desk for digital currencies. NYC based, she represents NautilusTech. NautilusTech is a US trading desk and company, with Prycto being the parent company. In brief, NautilusTech provides whiteglove services (marked by custom care and attention) for those who prefer traditional ways of working with OTCs.<\/p>\n
\u201cGiven the limitations faced when transacting large amounts with non-OTC services, many must work with an OTC, regardless of the effort it will take them. But, for those who want to make large transactions quickly, efficiently, and digitally, Prycto\u2019s easy-to-use platform makes the grade. Their lower-than-average minimums, and low fees, allows more groups to work with them.\u201d<\/p>\n
As Bea mentioned, liquidity definitely contributes to the user experience of an OTC, yet it can also make it necessary to use an OTC. However that is not always enough for an OTC to be competitive, as Bea implies. OTCs need to compete with each other, and the user experience of the trade or a given platform can be the difference between two great OTCs. Having great liquidity can also help with speed, depending on the OTC. As we know, speed of a transaction can make a large impact on user experience.<\/p>\n
Business Development Manager and former IFC, World Bank Group Officer, Omar Hamwi, spent the whole of last year planning and coordinating the Dash FastPass network program, aligning with major partners and closing those deals. Including, working with Bea O\u2019Carroll. Since launch, the results are clear, and FastPass network continues to grow at lightning speeds.<\/p>\n
Omar mentions the importance of Bea and Prycto\u2019s work: \u201cAny business would do well to look at user experience as ways to attract and retain users. No one understands this better than Bea and Prycto. They are gems. Bea, who leads Prycto\u2019s USA operations, is one of the most client-focused people I have met. In a market where scams are common, client-focused attention to detail cultivates much-needed trust.\u201d<\/p>\n
To summarize, selecting an OTC is important in order to help mitigate the risks of fraud, slippage, and generally getting the best price for your trade.<\/b><\/p>\n<\/h3>\n
Selecting a Crypto OTC Service<\/b><\/h3>\n
Reputation<\/b><\/h4>\n
You will need to select an OTC service to complete an OTC trade. Not all OTC trading service providers are reputable. The very finest crypto OTC trading service providers take deeper care, and form a customer-centric workflow that showcases innovations like escrow, syndication, and lending. Top crypto OTC providers are able to quickly adapt to the movements of new and sensitive markets. These companies provide vital services related to cryptocurrency pricing, liquidity, news and market information.<\/p>\n
We suggest that you choose a provider based on their reputation for conducting transactions in ever-growing markets. They also need to be great at understanding and responding to high volatility, illiquidity issues, and algorithmic trading practices. The major convenience is that OTC providers give investors a single price with individualized solutions. This happens without having to work with a broker. However, purchasers of cryptocurrencies from OTC markets are still required to complete Know Your Customer (KYC)<\/a> and Anti-Money Laundering (AML)<\/a> processes to prove identity to the OTC service provider.<\/p>\n Put more elegantly by Bea, \u201cTo anyone interested in trading digital assets, my advice is to do your homework beginning with security measures.\u00a0 Crypto trading has a lot of operational intricacies that you wouldn\u2019t expect and there are many ways that someone new to the space may make an error or get hacked\/ scammed.\u201d<\/p>\n There is a word that strikes fear into the heart of crypto traders: Liquidity<\/a>. As corporations and operating budgets grow, a greater and more consistent liquidity, at lowest-possible cost to companies, will be expected.<\/p>\n In an excerpt from a cointelegraph.com article, \u201cCrypto OTC Trading, Explained\u201d an explanation is provided as to why people select OTC trading vs. trading on a cryptocurrency exchange:<\/p>\n \u201cIf you are seeking higher liquidity, combined with a decent level of anonymity, OTC trading might be an elegant solution for you\u2026 The experts agree that major exchanges usually have lower liquidity than what is ideal. This is why you might rather use OTC trading if you are looking to invest more… If you apply to OTC trading, the transaction is performed directly and does not show up in order books, which is why it will not affect the price. Moreover, if you are investing in a lot of bitcoin or any other crypto asset, you might want to protect your identity and keep the deal anonymous.\u201d<\/p>\nLiquidity and Privacy<\/b><\/h4>\n