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What is Crypto OTC and How Does it Work?
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Over-The-Counter or OTC Trading in a framework of financial technology and more precisely, within the crypto and Bitcoin space, is a private deal for buying or selling crypto. The transaction processes involved with such trade are not regular as there are considerable variations at different levels depending on the actors of the exchange and the market forces of each period. As such, this provides increased privacy for both buyers and sellers, making OTC highly intimate and individual.
Generally, OTC traders maintain a varied network of crypto investors and crypto sellers. In a bid to satisfy their customers, OTC traders are constantly in search of buyers and sellers, willing to trade at good prices. Moreover, their consistency, interactions and speculations make them capable of detecting the best time to conduct a given transaction. Thus, once buyers or sellers place their orders, the OTC trader endeavours to purchase the assets needed to carry out a requested transaction.
Understanding Crypto OTC in seconds
Crypto OTC is simply the trading of crypto assets directly between two parties. This literally paints a picture of two persons involved in a negotiation. On the one hand, there is one person available to sell assets at a given price. And on the other hand, there is the other person, willing to buy assets at a given price. Trade occurs when both parties agree on the price of the trade or exchange for which they are united. A trade can be crypto-to-crypto (For example swapping Bitcoin with Tether) or fiat-to-crypto (For example swapping XAF or Rand for Bitcoin and vice versa). Whether crypto-to-crypto or crypto-to-fiat, the need for a “desk” to effect the transaction is imperative. Desks are simply professional platforms that deal with crypto buyers or sellers directly. They could be Principal or Agency.
Difference between Principal Desk and Agency Desk
Trading with principal desks means they use their funds to purchase solicited assets, upon request of their customers. This by extension implies that they are assuming risk in the process on behalf of their customer.
This is exactly how it happens: After placing a request through a chat application, one of the desk’s traders respond with a price based on current market rates and conditions. At this point, you (the customer) can decline, counter (negotiate) or accept. Upon mutual agreement, the desk commits to deliver the asset, per a legal agreement signed during the onboarding process.
Having agreed, the desk searches within its network to figure out the best way to purchase the requested assets. The fact that the desk is using its funds to purchase a customer's assets is risky because there is a high probability that prices start spiking higher before they can attain the customer request. This is disadvantageous to the desk given that it aims to purchase all the Ordered assets for an average price slightly under the market price in order to make a profit. In case the desk successfully purchases all your Ordered Assets, the customer receives instructions on where and how to make payments for the Assets. So, the desk only sends the Assets purchased after the payments have been made.
Contrary to a principal desk, Agency desks do not trade with their own funds and thus, do not assume market risk. Here, customers have to pay a fee to the desk, permitting it to act as a middleman on their behalf.
For instance, If you were to buy any assets from an agency desk, you would first fund an account with them and then offer a range you are willing to buy the assets for. The agency desk will then go and attempt to purchase assets with your funds at an agreed-upon price. In this case, the risk falls on the customer because the price of assets (BTC or USDT) may increase before the desk can complete the purchase. If this were to happen, it is obvious that the customer’s request will not be gratified and cannot.
Why Use a Crypto OTC Desk?
Buying or selling large amounts of crypto is the most difficult thing faced by crypto merchants. Let’s presume that you want to buy 1000 BTC. First of all, it will be challenging to get all that amount from one seller all at once. If you attempt to buy from one seller, chances are that all the assets won't be gotten at the same price because fulfilling a large amount of order on a single exchange will take time and market volatility will influence the price.
However, this problem of buying huge amounts of crypto has been resolved through trading with OTC desks. Through the Principal or Agency desk, you can buy any amount of BTC on a single order with no stress.
Before discussing the Yellow Card OTC desk procedures, let's quickly look at some advantages of trading crypto using OTC desk
The Advantages of Trading with an OTC desk
- Liquidity: Liquidity is the prime factor as far as trading through an over-the-counter desk is concerned. It is an open secret that crypto exchanges specifically have very low liquidity. Exchanges often struggle in executing a large order effectively so they break that order into small pieces. Purchasing cryptocurrencies through OTC desks, on the other hand minimises the risk of price spikes given that most OTC desks can sell large amounts of crypto.
- Confidentiality: OTC desks exchanges are a one-to-one affair, thereby offering slim chances for third parties to come between a transaction or have knowledge of one. This makes exchanges within this space to be essentially private. As such, customers are able to run their transactions without any fears or threats.
- Direct Transactions: With OTC desks, buyers and sellers are empowered to make direct trades void of third parties and without any restrictions. This directly solves the problem of scam schemes that most often act under the banner of third parties, commonly referred to as “plugs”. With direct transactions, buyers are able to trace their sellers.
Crypto OTC Desk at Yellow Card
At Yellow Card, Over-The-Counter Trading uses the Principal desk- thereby assuming the risk for our clients. The process is not only easy and relaxing - It is also a response to your fears and uncertainties about the much-talked-about crypto saga. First, get to know the five-step procedure that takes a few minutes to complete.
- Fill account request: Get started by simply filling out a request form.
- Complete KYC: On the limits tab of your YC account, upload the required documents to increase your limits.
- Request a quote for your grade: We will connect you to one of our expert traders to provide a quote per your request.
- Confirm trade: You choose whether or not you wish to buy at the price offered. If you agree, the trade is confirmed, and the trader will ask for your transaction details (fiat or crypto). After confirming the trade, wait for a confirmation of the transaction via email. In this email, you’ll find payment instructions for the OTC bank account, where you will make the payment.
- Complete trade: Once Yellow Card OTC receives the transaction, our trader will send the assets to the specified wallet address, along with a confirmation email to your inbox, and the trade is complete.
Where to find Yellow Card OTC desk
Yellow Card OTC desks are operational in all YC regions. In the African region, trade with our biggest markets in Ghana, Cameroon, Uganda and South Africa at exceptional prices and rates. In each of the markets, get a minimum transaction at 50 000 USD.
The uniqueness of OTC at Yellow Card lies in the satisfaction of our clients. With Yellow Card, clients can buy any amount of Bitcoin their wallet permits them. No limitations, no restrictions. Besides, the team of expert traders take your demands personally and handle them with all the integrity and professionalism required to keep you satisfied and impressed. Finally, your transactions with the Yellow Card OTC desk are treated with the utmost confidentiality.
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