Over-the-counter transactions are financial trades conducted directly between two parties without the involvement of a centralized exchange or public order book. In the cryptocurrency market, OTC transactions are typically used for large-volume trades by institutions or high-net-worth individuals to minimize market impact and obtain specific pricing. These transactions often involve a broker or a specialized desk that facilitates the direct negotiation and settlement of digital assets. OTC desks provide liquidity and discretion for significant block trades.
Context
OTC transactions are frequently highlighted in news when discussing institutional participation and market liquidity in the digital asset space. Debates often address the transparency of OTC markets, their role in price discovery, and the potential for regulatory oversight to ensure fair practices and prevent market manipulation.
Deploying a robust oracle architecture for Smart Derivative Contracts eliminates counterparty risk and automates OTC settlement, driving capital efficiency.
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