Due to the development of stock trading, new niches for certain customers appear. So, in particular, large and institutional clients have a demand for over-the-counter trading. The term itself implies not to trade on the stock exchange, where, due to the scatter of volume and prices, the selling price is average. In the case of an interested investor, it is possible to sell a strictly large amount at a strictly negotiated price completely confidential. Such a service, at the same time, is suitable for large cryptocurrency holders and they are not interested in having to “lower” or “raise” the market with their large volume. And market participants themselves do not want to see drastic changes in the market, which contradict the established tendencies of trading. Therefore, over-the-counter trade in cryptocurrency had become especially popular in 2018, when a strong capital outflow from crypto-exchanges began.
At the same time, we should not forget about security. Sensational MT. Gox and a number of small hacks in other crypto-exchanges do not inspire confidence for large cryptocurrency holders. Therefore, the scheme “I have sold, you have bought”, where the OTC-Exchange serves as an organizer of the meeting, and not as an account holder, more than ever was quite in demand. At the same time, there is nothing illegal, since this practice came from the classic stock market, where sales contracts are concluded.
Also, there have been changes on the OTC-exchanges over time, and this segment has won the “average participants” of trades that make transactions starting at $100 thousand dollars. It is known that customers of classical exchanges face difficulties of verification and security. In addition to this matter, one can add difficulties of depositing and withdrawing funds from the accounts of the exchange. There is regulatory uncertainty, which naturally contributes to the flight of capital from one sandbox to another.
It is clear that this direction of trade will develop, and in the next few years, we will see traditional instruments for liquidity increase. Risk management will also appear in the spotlight if the OTC-exchanges implements margin trading. Therefore, competitive advantages will also develop, since few trading platforms have secured such an approach to trade.
The matter also relates to the companies that are in the post-ICO stage. Over-the-counter trading gives such clients reliable guarantees of security and confidence in the transaction.
As for the latest news, Binance has recently informed the public that it was going to launch an over-the-counter trading platform. Representatives of the exchange announced the benefits, one of them was the usage of previously open accounts for the calculation of OTC transactions. The statement also says that more than 80 cryptocurrencies will be available for clients of the site for speculative and investment trading.
Another undoubted advantage is the fact that Binance will ensure the closing of the transaction at one price, without taking the table of completed transactions (“transaction prints”) into account, for the confidentiality of trading. But having all this, the requirements for customers have increased, such as a higher level of verification and placement of an order worth at least 20 BTC.
In general, we note the growing trend of the OTC-trading and related services development. A wave of popularity of such a niche has reached eminent exchanges, such as Bittrex and Poloniex. They reported the launch of such a service last year. Therefore, it makes sense to assume that crypto-capital will reliably “assimilate” in over-the-counter trading, while the world will deal with the regulation of cryptocurrency trading.