Crypto as a Service (CaaS): Key Benefits, Providers, and Use Cases
Dive into CaaS with our guide. Discover insights, benefits, and challenges for informed crypto decisions.
Nov 25 –
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It’s never been easier to buy and sell cryptocurrency, but traditional trades through a crypto exchange mean vetting and signing up for new trading platforms. Financial institutions, wealthy individuals, and experienced traders can instead opt for over-the-counter (OTC) trading platforms. OTC trading platforms allow for the same peer-to-peer trading for digital assets that they do for other asset types.
In this guide, we’ll cover the ins and outs of this trading method and explain the most popular OTC trading platforms available.
What Is an OTC Trading Platform?
An OTC trading platform allows users to trade crypto with counterparties without intermediaries. This kind of decentralized trading platform makes it simple for you to buy and sell crypto without a centralized authority managing the transaction.
OTC trading platforms for crypto work just like they do for fiat assets. This makes them an attractive option for experienced broker-dealers.
OTC trading platforms are the opposite of standard exchange platforms. With an exchange platform, asset prices can constantly fluctuate depending on its available liquidity.
Centralized trading platforms are more susceptible to market manipulation, in addition to slippage that can affect trades. OTC trading platforms offer freedom to crypto traders to deal directly with other traders.
Many crypto traders value this freedom, especially if they’re regularly placing large block orders and need to receive custom quotes instantly.
Advantages of Using OTC Trading Platforms for Crypto
OTC trading platforms offer a wide range of benefits for experienced investors and high-net-worth individuals, including:
Privacy and Discretion
OTC trading provides enhanced privacy compared to open order book trading. Specifically, large institutional investors can make discrete and large trading volume transactions. If you value your privacy when dealing with crypto, using an OTC trading platform is your best alternative.
Price Stability
Traditional crypto trading platforms are susceptible to rapid price fluctuations if large order volumes take place. OTC crypto trading platforms aren’t affected by uneven market prices. The direct negotiation with other sellers means you’ll benefit from long-term price stability any time you want to make a transaction on the OTC market.
Liquidity
OTC crypto trading platforms benefit from the availability of large order fulfillment without impacting market prices for traders. These platforms have high liquidity pools, meaning they can back large orders without altering market prices.
Institutional traders, who regularly fulfill large orders managing mutual funds, pension funds, insurance companies, and exchange-traded funds, will find OTC platforms work the same way for digital assets as they do for other trades..
Reduced Slippage
Slippage can have a negative impact on trading activity in a traditional exchange. The good news is that OTC platforms don’t fall victim to constant market fluctuation and volatility since users trade directly with each other.
Customization
OTC deals can be tailored to fit specific needs and requirements. On these platforms, buyers don’t have to deal with slippage and market fluctuation, meaning they can set deals on their own terms directly with another buyer.
7 OTC Trading Platforms You Should Check Out
If you’re a financial institution or high-net-worth individual, here are seven OTC trading platforms you should consider for crypto.
1. AlphaPoint eOTC
AlphaPoint is one of the most well-known providers of white-label exchange software for traditional exchange-based crypto trading, but also offers a robust OTC trading platform alternative.
Top Features
- Liquidity pools to high-net-worth individuals and large institutions
- Custom real-time pricing to execute large order volumes without slippage
- Ability to trade on credit without requiring an upfront deposit
- 24/7 account management and support
- Access to more than 100 different coins
- Top-notch security protocols, such as KYC, AML, and 2FA
- Intuitive user interface for simple trading and investing
2. Coinbase Prime
Coinbase Prime is a full-service brokerage platform that allows institutions to execute trades and manage custody assets.
Top Features
- Connect to a wide range of liquid exchanges all from one platform.
- Use an advanced smart order router to execute intelligent trades.
- Receive comprehensive financing solutions to optimize trading for bear and bull markets.
- Move assets easily in and out of cold storage, stake, and take part in governance from the same platform.
- Custody several assets with top-notch custodians.
3. Fidelity OTC
Fidelity is one of the world’s most recognizable brokerage firms, and their OTC platform also allows for cryptocurrency trading.
Top Features
- Trusted reputation among financial institutions
- High liquidity pools to protect investments at stable market prices
- Industry-leading security protocols
4. FalconX
FalconX is a new name in institutional crypto trading platforms. With FalconX, users can manage their crypto strategies with efficient workflows from an intuitive interface.
Top Features
- Advanced trading algorithms and functionality for intelligent trades
- Deep liquidity pool to hedge against price fluctuations
- Exceptional customer service available 24/7
- High-volume trade execution capabilities, regardless of order size and scale
5. Crypto.com
Crypto.com, a leading crypto exchange platform, has expanded into offering an OTC platform for financial institutions and high-net-worth individuals. Crypto.com makes it possible for VIPs to receive quotes instantly from large block orders.
Top Features
- Integration with Crypto.com’s ecosystem of products
- High-level security protocols
- Wide range of supported trading assets and derivatives
6. Kraken OTC Desk
Like Binance and Coinbase, Kraken is a reputable crypto exchange that offers OTC trading services for financial institutions. Users can execute high-volume orders off the Kraken exchange and broker flexible deals according to their terms.
Top Features
- Deep liquidity pools for hassle-free trading
- Dedicated OTC trading team
- Global clientele for diverse trading
- Secure training environment backed by industry-leading protocols
7. TD Ameritrade
TD Ameritrade offers a crypto OTC platform for privatized trades. Investors can execute OTC trades like closed-end funds. Users don’t need a crypto wallet to begin making direct trades on their terms on a secure blockchain network.
Top Features
- Highly trusted reputation in the FinTech industry
- Top-notch customer service team
- Integration of crypto in their wider platform
- Award-winning education resources for traders
- Advanced and intuitive trading platform
How To Choose the Right OTC Trading Platform
Not all OTC trading platforms are created equal. Choosing the right one will ultimately come down to your priorities, but here are some factors to consider as you choose.
Choose Based on Reputation
Choosing an OTC platform from a reputable financial institution is crucial, and when trading digital assets, you should pick a platform with deep experience in the crypto space. Consider product reviews and testimonials to verify a provider’s reputation.
Prioritize Security
The best crypto OTC trading platforms utilize industry-level encryption methods known in the financial sector to keep digital assets safe. These security protocols include Know Your Customer (KYC), two-factor authentication (2FA), and identity verification. Institutional traders should prioritize OTC platforms with robust anti-fraud protocols.
Don’t Forget About Ease of Use
If you’re executing large orders, you shouldn’t have to navigate a clunky trading platform. A quality over-the-counter trading platform leverages stunning UI features for all kinds of traders, whether they’re new or familiar with private investing.
Remember That Liquidity Is Essential
OTC platforms backed by solid liquidity pools can reinforce all trades made across the platform. This stops rapid price fluctuations from happening and prevents slippage — two attractive benefits for financial institutions.
Before choosing an OTC platform, make sure they have suitable liquidity to run a smooth platform.
Start Investing the Right Way With AlphaPoint
AlphaPoint stands out because of its long history with crypto assets, access to substantial liquidity, comprehensive platform offerings, and commitment to security. High-net-worth individuals (HNWI) and financial institutions interested in OTC trading platforms can use AlphaPoint’s technology to launch a trading platform to exchange crypto as simply as they would for any other asset.
With AlphaPoint, you get the most out of OTC trading with zero resistance. Request a demo today to get started.
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