Over-the-Counter Crypto Exposure

Over-the-counter (OTC) crypto exposure refers to the risk inherent in direct, bilateral trades conducted outside of public exchanges. These trades are often used by institutional investors to execute large orders without causing significant price slippage.

Because there is no central order book or exchange clearing, the risk is entirely dependent on the creditworthiness of the specific counterparty. There is no automated liquidation or margin engine to protect the parties, making legal contracts and trust the primary safeguards.

This environment is susceptible to information asymmetry, where one party may have better data than the other. Managing this exposure requires thorough due diligence on the counterparty's financial health and the use of sophisticated legal agreements.

It is a high-stakes environment where settlement is based on private arrangements rather than public infrastructure.