Crypto OTC desks and block trading

We are going to give you the conclusion first, because a lot of content in this area exists to sell something: if you are a retail investor buying a few thousand pounds of bitcoin, an OTC desk has nothing to offer you. The rest of this page explains why, and what OTC is genuinely for.

Why OTC exists

An order book is a queue of orders at different prices. Buy a small amount and you take the top offer and nothing changes. Buy a very large amount and you consume the top offer, then the next one, then the one after that — each successively worse. By the time your order fills you have paid a materially higher average price than the one you saw when you pressed the button.

That is slippage, and it scales with order size relative to available liquidity. A $10m purchase on a public exchange moves the market visibly. The same trade through an OTC desk executes at a single negotiated price and, from the market's point of view, does not happen until it has already happened.

There is a second motive: privacy. A large accumulation visible in the order book invites other participants to trade ahead of it. Institutions and large holders use OTC partly to avoid signalling intent.

How an RFQ trade works

The mechanism is a request for quote, and it is simpler than the jargon suggests.

1. The request. The client specifies the asset, the side (buy or sell), the amount, the pair, and any timing or settlement constraints.
2. The quote. The desk prices the trade against its available liquidity, its own inventory, market conditions and its risk limits. The quote is valid for a defined window — typically short, because the market moves.
3. Acceptance. If the client accepts within the window, the trade is locked at the quoted terms for the full size. No slippage, because there is no order book to work through.
4. Settlement. Both sides deliver. The arrangements here vary and matter — see below.

Clients often request quotes from more than one desk simultaneously and take the keenest quote. That is normal practice and it is the main discipline on OTC pricing, since there is no public book to check the quote against.

Principal and agency desks

Two business models, with different incentives, and it is worth knowing which one you are dealing with.

A principal desk fills the trade from its own inventory. It takes the other side and carries the position and the risk. Its profit is the spread, and it will price to reflect how difficult it expects unwinding that position to be.

An agency desk sources a counterparty on your behalf and charges a commission. It does not take the other side, so its incentives are more directly aligned with getting you a good fill — but it also cannot commit to immediate execution in the way a principal desk can.

Neither is better in the abstract. A principal desk gives you certainty; an agency desk gives you alignment. What matters is knowing which you are dealing with, because the spread on a principal quote is the desk's revenue and the commission on an agency trade is disclosed separately.

The minimums

On the numbers specifically: the generally accepted industry benchmark for a crypto OTC minimum is $100,000 per trade, and Kraken's desk has used that figure. Binance's OTC desk has been reported at $200,000 or more. In the UK, institutional desks are reported to start around £50,000–£100,000 per trade, while some platforms have introduced lower-threshold "prosumer" desks accepting larger trades from around £1,000.

Those figures are worth treating as indicative. Minimums are set per desk, vary by asset, and are part of a commercial relationship rather than a published tariff.

The cost comparison

The argument for OTC on large orders is genuinely quantitative rather than a matter of service quality, and it runs like this.

A block trade quoted at a 10–15 basis point spread frequently beats the 30–50+ basis points of slippage the same order would generate working through a public order book. The OTC spread looks worse than the exchange's top-of-book spread when you compare them directly — but the exchange spread only applies to the first slice of your order. Everything after that fills progressively worse. The OTC price applies to all of it.

Invert that for a small order and the logic collapses. A modest trade fills entirely at the top of the book with negligible impact, so there is no slippage for a desk to save you and the wider OTC spread is just a worse price.

Settlement risk

The risk that does not exist on an exchange and does exist here, so it deserves its own section.

Between agreeing a price and both sides delivering, somebody is exposed. If you send funds first, you are exposed to the desk. If the desk delivers first, it is exposed to you. On an exchange this problem does not arise, because the venue sits in the middle and settles atomically.

Institutional desks manage it through pre-funding, escrow arrangements, or settlement through a qualified custodian who releases both legs simultaneously. Regulated desks make these arrangements explicit in their documentation.

The practical instruction is short: ask how settlement works before agreeing a trade, not after. A desk that is vague about it is telling you something about how it operates.

Does this apply to a retail investor?

For the overwhelming majority, no — and it is worth being direct about that, because a good deal of OTC content is written to make retail readers feel they are missing a tier of service.

They are not. The value of OTC is entirely in avoiding market impact, and a retail-sized order in a liquid asset has none to avoid. Paying a wider negotiated spread to solve a problem you do not have is a worse outcome, not a more sophisticated one.

Where it starts to matter is at the boundary — an investor selling a holding that has grown into a six-figure position, or a company or fund acquiring a treasury allocation. At that point the slippage arithmetic changes and requesting quotes from two or three desks is a reasonable thing to do.

The other case worth mentioning is a large disposal. People think about market impact when buying and forget it when selling, and a large sale into a falling market is exactly when impact is worst.

The UK angle

A desk serving UK customers is subject to the same regime as any other cryptoasset business: registration with the FCA under the money laundering regulations, the financial promotion rules, and the appropriateness and cooling-off requirements where they apply to the client.

There is no separate lighter-touch regime for OTC because a trade is large. Equally, a large transaction attracts more source-of-funds scrutiny rather than less — that is how anti-money-laundering controls are designed to work, and a desk that does not ask is a desk to walk away from.

On tax, size changes nothing about the principle. A disposal is a disposal, chargeable to capital gains tax at 18% or 24% above the annual exempt amount, with the same share pooling rules applied. What does change is that a large disposal in a single tax year may push more of the gain into the higher band — which is a timing consideration worth taking advice on rather than working out from a web page. See UK tax treatment.