Crypto Exchange Binance Launches OTC Trading Desk

Siamak Masnavi

On Wednesday (January 23rd), Binance, one of the world's largest cryptocurrency exchanges by adjusted trading volume, announced that it had launched its crypto-to-crypto over-the-counter (OTC) trading desk.

Over-the-counter (OTC), or off-exchange trading, "is done directly between two parties, without the supervision of an exchange. It is contrasted with exchange trading, which occurs via exchanges." Trading on an exchange "has the benefit of facilitating liquidity, providing transparency, and maintaining the current market price," while in the case of an OTC trade, the price is generally not publicized.

Binance's blog post says that this OTC desk allows "Binance users to trade larger amounts of many cryptocurrencies listed on the exchange, with transactions being settled via their Binance accounts."

It lists the benefits of using its OTC desk for crypto-to-crypto trades as follows:

  • "You are able to quickly trade large quantities of cryptocurrencies in a single trade."
  • "You can save time by clearing your trades at one price."
  • "Your trades are private because the order books will not be touched."
  • "You will benefit from direct settlements into your Binance account with your OTC trades; no need to handle different wallet addresses."

And it lists the following as its competitive advantages:

  • Specialization in "crypto-to-crypto trades, across more than 80 cryptocurrencies listed on Binance."
  • Always seeking to "offer quick pricing for your OTC trades, with simple and quick settlement processes."
  • A "broad and diverse client base as an effective distribution platform."

The main two requirements for becoming a client of Binance's OTC trading desk are

  • "A Binance Level 2 (verified) account or above"
  • "A trade order worth at least 20 BTC"

Binance's launch of its OTC trading desk comes just nine days after cryptocurrency exchange Bittrex announced that it had an OTC desk for "approved customers" to trade "digital assets supported by Bittrex, including nearly all 200 tokens on the platform." Bittrex said that its OTC desk would "reduce customer price risk and offer rapid trade execution," giving "customers the opportunity to buy or sell the extensive selection of digital assets supported on the Bittrex platform, including providing guaranteed pricing for large trades, which are typically $250,000 or greater."

On 17 December 2018, crypto research boutique Diar reported that OTC trading volume was growing, with Max Keidun, CEO of peer-to-peer exchange HodlHodl, which also have an OTC Desk, telling Diar that "large order requests have grown exponentially in 2018 doubling month-on-month."

And on 3 January 2019, Circle announced that its OTC trading business, Circle Trade, had "continued to expand despite a tumultuous year for the industry," bringing in "a record number of new institutional clients," executing over "10,000 OTC trades," and executing "$24 billion in notional volume."

Featured Image Courtesy of Binance