An OTC trading framework is a set of rules, procedures, and technological infrastructure facilitating the direct exchange of digital assets between two parties, bypassing public exchanges. This framework typically involves brokers or specialized desks that arrange large-volume trades without impacting market prices on open order books. It provides liquidity and price discretion for institutional investors and high-net-worth individuals. Compliance with anti-money laundering and know-your-customer regulations is a core component.
Context
OTC trading frameworks are crucial for institutional participation in the digital asset market, enabling large trades that public exchanges might struggle to absorb. Regulatory scrutiny of OTC desks is increasing, with a focus on market integrity and transparency. News often reports on the growth of institutional crypto trading, where OTC platforms play a significant role in providing discreet and efficient execution for substantial transactions.
Hong Kong's SFC streamlines the licensing path for new Virtual Asset Trading Platforms while simultaneously planning new regimes for VA custody and OTC trading.
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