In this article
You choose a crypto OTC desk by scoring it on eleven criteria and comparing the all-in cost of a real trade, not the headline spread: regulatory status, principal or agent, assets and pairs, minimum ticket, pricing model, settlement terms, custody, the desk's own solvency, hours, reporting and onboarding time. A desk that answers all eleven in writing, with documents you can check against a public register, is a desk you can compare; a desk that answers by reassurance is not yet one.
An over-the-counter (OTC) desk is a firm that trades digital assets with you bilaterally, at a price agreed between the two of you, instead of through a public order book. Funds, corporate treasuries, family offices and large private holders use one when the size of the trade would move the price on an exchange, or when they want one counterparty, one price and one confirmation for the whole amount.
The questions below are the ones a desk's sales and compliance staff expect from a professional client, and a well-run desk answers them without difficulty. This is general information for a professional reader; licensing rules differ from one country to the next, and the points that depend on a jurisdiction are named as such.
The first two figures come from the illustrative worked example further down, with fictional desks and quotes. The third is stated by FinCEN.
What separates one crypto OTC desk from another?
Crypto OTC desks differ on eleven points that fall into four groups: who the desk is in law, what it trades and at what price, how the trade is completed, and how the relationship runs day to day. Price is one point out of eleven, and it is the one that tells you least when taken alone.
The first group is identity: the legal entity you would contract with, where it is registered or licensed, and whether it trades with you as principal or arranges the trade as an agent. The second group is the offer: the assets and pairs it quotes, the smallest trade it accepts, and the way it earns its money. The third group is completion: how the two legs are exchanged, who holds the assets while that happens, and how much you are exposed to the desk's own financial health during that time. The fourth group is service: the hours it quotes, the records it sends you, and the time it takes to open an account.
One rule applies to every question: ask for the answer in writing and ask which document it comes from. "We are regulated" is a statement. A registration number, the name of the registered entity and the name of the authority form an answer you can verify in ten minutes.
How do you check a crypto OTC desk's regulatory status?
You check a crypto OTC desk's regulatory status by asking for the exact legal entity that will be your counterparty, the authority it is registered or licensed with, and its reference number, then looking that entity up yourself on the authority's public register. The check takes minutes and settles three things at once: the entity exists, it is the one named on the contract, and its status is current.
Start with the entity. Desks often operate through several companies, one per region, under a single trading name. The entity that signs your agreement and receives your funds is the one that matters, and it should be the one you find on the register. If the name on the bank details differs from the name on the agreement, ask why before going further; there are ordinary reasons, such as a payment agent or a group treasury company, and the desk should be able to document them.
Then use the register that fits the jurisdiction. Three examples show what each kind of entry does and does not tell you.
- United States. A firm that qualifies as a money services business registers with the Financial Crimes Enforcement Network (FinCEN), which publishes an MSB Registrant Search. According to FinCEN, entities must renew their registration every two years, the search page is updated weekly, and entities that miss their renewal are removed. Registration at federal level is separate from the money transmitter licences issued by individual states, so ask which state licences the entity holds and check each state's own records.
- United Kingdom. The Financial Conduct Authority (FCA) requires firms that provide in-scope cryptoasset services in the United Kingdom to register with it under the Money Laundering Regulations before they start trading, and it lists registered firms on its register. The FCA has also said that a wider authorisation regime under the Financial Services and Markets Act is expected to start on 25 October 2027, and that being registered under the Money Laundering Regulations does not guarantee authorisation under the new regime. Ask a United Kingdom desk which status it holds and which it has applied for.
- European Union. Under the Markets in Crypto-Assets Regulation (MiCA), a firm needs authorisation as a crypto-asset service provider to serve clients in the European Union. The European Securities and Markets Authority (ESMA) keeps an interim MiCA register of authorised providers, and stated that the transitional periods for firms operating under earlier national rules ended on 1 July 2026. A desk serving you from the European Union should appear on that register, with the member state whose authority granted the authorisation.
Other financial centres run their own regimes and their own registers; the method is the same everywhere. Ask also which services the permission covers. A firm may be authorised to exchange assets and not to hold them in custody, or the reverse, and the scope is printed on the register entry.
What a licence changes is your position if something goes wrong: there is a supervisor, a set of conduct rules and, in some regimes, rules on how client assets must be kept.
Is the desk acting as principal or as agent?
A desk acting as principal buys from you or sells to you from its own book and is your counterparty; a desk acting as agent finds the other side and arranges the trade between you and a third party. The answer determines whom you face, how the desk is paid and what conflicts of interest exist, so it belongs in the agreement, not in a phone call.
With a principal desk, you receive one price and the desk carries the market risk from the moment it confirms. If the market moves while it sources or sells the asset, the gain or the loss is the desk's. Your credit exposure is to the desk alone. Its earnings are the difference between your price and the price at which it covers the position, which you do not see.
With an agent, often called an agency desk or a broker, the firm goes to its network of counterparties, brings back a price and charges a stated commission. You may or may not learn who the other side is, and your exposure during completion may be to that third party, to the agent, or to both, depending on how the documents are written. The commission is visible, which makes cost easy to audit.
Many firms do both, depending on the asset and the size. Ask three questions: in which capacity does the firm act on this type of trade, can the capacity change from one trade to the next, and how will each confirmation state it? A good answer is a clause in the trading agreement and a field on every confirmation that reads "principal" or "agent". Neither model is superior. A principal quote gives certainty of price and a single counterparty; an agency arrangement gives visibility of the fee and, for unusual assets, access to holders the desk could not find from its own book.
Which assets, pairs and minimum ticket does the desk cover?
A desk fits your activity when it quotes the assets and currency pairs you actually trade, in the size you trade them, and accepts your smallest ticket as well as your largest. Coverage is a matter of fact, and it is checked with a list and two numbers.
Ask for the list of assets the desk quotes as principal, the list it can source on request, and the settlement currencies it accepts: which national currencies, which stablecoins, and on which networks. A token can exist on several networks, and a desk that delivers on one you cannot receive on is of no use for that trade.
The minimum ticket is the smallest trade the desk will quote. It is set by the desk and varies widely from one to the next, so ask for the figure instead of assuming one. At the other end, ask what size the desk can quote in one price for your main pair, and at what size it would propose to split the trade over time. A good answer gives numbers for your pair and says plainly where the desk's appetite ends.
How does a crypto OTC desk charge: spread, commission or both?
A crypto OTC desk charges through a spread built into the price, through a commission shown separately, or through both, and the fair comparison between two desks is the total of every charge in the same unit. That unit is the basis point: one hundredth of one percent of the amount traded, so 10 basis points on $6,000,000 is $6,000.
| Pricing model | What you see | What to ask |
|---|---|---|
| Spread only | One all-in price, above the market when you buy and below it when you sell | Which reference price the spread is measured against, and at what time |
| Commission only | The price obtained from the other side, plus a stated fee | The rate, the base it applies to, and whether it changes with size |
| Spread and commission | A marked price and a separate fee | Both figures, so that the total can be compared with an all-in quote |
The spread is only meaningful against a reference. Ask which one the desk uses, such as the midpoint between the best buying and selling prices on named venues at the moment of the quote, and whether the confirmation records it.
Then ask for the charges that sit outside the price: a settlement or processing fee, a withdrawal or network fee, a custody fee if the desk holds assets for you, charges on incoming or outgoing bank transfers, and any conversion margin if you fund in a currency other than the one quoted. None of these is improper; they pay for real services. They need to be on the table before you compare.
What should you ask about settlement and custody?
On settlement and custody, ask the desk who sends first, how long each party is exposed, and who holds the assets at every point between the agreement and final delivery. These terms carry a cost and an exposure that the quote does not show.
Settlement is the exchange of the two legs of the trade: your money against the desk's assets, or the reverse. The desk may ask you to prefund, meaning to deliver your side before it delivers its own; it may deliver first to established clients; or both legs may be exchanged at the same moment through an arrangement both sides trust. Ask which applies to a new client, what would change it, and how many hours or days pass between your payment and your receipt. Prefunding is a normal request to a client the desk does not yet know, and it has a price: your cash is out of your hands and exposed to the desk for that period.
Custody is the safekeeping of assets. Ask whether the desk holds client assets itself or through an independent custodian, whether client assets are segregated from the desk's own, and in whose name the accounts or wallets are held. If you will leave assets with the desk between trades, ask for the terms that govern them: whether the desk may lend or reuse them, and what the agreement says would happen to them if the desk failed. A good answer is a written description of the flow of funds and assets, with the name of each entity that holds them.
How do you assess the desk's own solvency and credit?
You assess a desk's solvency by asking for evidence of its financial position and by limiting how much you have with it at any one time. A bilateral trade has no clearing house standing between the parties, so from the moment you send your leg until you receive the other, the desk's ability to perform is your risk.
Ask what the desk can share: audited financial statements and the name of the auditor, the regulatory capital it is required to hold if it is supervised, the ownership of the entity, any guarantee from a parent company, and its insurance cover with what that cover actually insures. Private firms do not always disclose accounts, and some will do so only under a confidentiality agreement; that is a reasonable condition.
Evidence reduces the risk and does not remove it, so set your own limit. Decide the maximum amount you accept to have outstanding with one desk, and structure trades to stay under it: smaller tranches, shorter prefunding, or settlement terms that reduce the open period. Credit runs in both directions. If you want the desk to deliver before you pay, expect it to ask you the same questions and to set a limit on you.
What service should you expect: hours, reporting and onboarding?
Expect a desk to state its quoting hours, to send a written confirmation of every trade, and to give a realistic onboarding time with a list of the documents it needs. These three points decide whether the relationship works in practice once the selection is made.
Digital assets trade at all hours, every day, while bank payment systems do not. Ask when the desk quotes, when it can settle the cash leg and the asset leg, and who is reachable outside its main hours. A desk that quotes around the clock but can only move bank money on business days in one time zone will hold your trade open over a weekend.
On reporting, ask for a sample trade confirmation. It should state the date and time, the legal entities on both sides, the capacity of the desk, the asset, the quantity, the price, the reference used, every fee, the settlement instructions and, once completed, the identifiers of the transfers. Ask also for periodic statements and for the data format, because your accountant, your administrator and your auditor will each need it.
Onboarding is the desk's own due diligence on you. A regulated desk must identify its client, the people who own and control it, and the origin of the funds, and it cannot quote you a firm price until that is done. Ask for the document list on day one and for the usual duration. A desk that offers to trade a large amount with no identification at all has not saved you time; it has told you how it treats its obligations.
What does a reusable scorecard for comparing desks look like?
A reusable scorecard lists each criterion with the question to put to the desk and the evidence that counts as a good answer, so that every desk is judged on the same eleven lines. Send the questions in writing, file the replies, and score each line only when you hold the document.
| Criterion | Question to ask | What to look for |
|---|---|---|
| Regulatory status | Which entity is my counterparty, and where is it registered or licensed? | Entity name and number found on the authority's public register, with the right scope |
| Principal or agent | In which capacity do you act on my trades? | Stated in the agreement and on every confirmation |
| Assets and pairs | Which assets, currencies and networks do you quote? | A written list covering what you trade, with limits by size |
| Minimum ticket | What is the smallest trade, and the largest in one price? | Two figures for your main pair |
| Pricing model | Spread, commission or both, against which reference? | A named reference and a complete fee schedule |
| Settlement | Who sends first, and how long am I exposed? | A written flow with timings, and the conditions for better terms |
| Custody | Who holds assets, and are client assets segregated? | Named custodian, segregation and reuse terms in the agreement |
| Solvency and credit | What can you show about your financial position? | Audited accounts or capital information, ownership, references |
| Hours and coverage | When do you quote and when can each leg settle? | Hours for both legs and a named contact out of hours |
| Reporting | Can I see a sample confirmation and statement? | Every field needed by your accounts and audit |
| Onboarding | Which documents, and how long? | A complete list on day one and a stated duration |
Weight the lines before you score them. A simple method is to give each criterion a weight from 1 to 3 for your activity and each desk a mark from 0 to 3 on that line, then multiply and add. Regulatory status and solvency work better as gates than as marks: a desk that fails either is set aside whatever its total.
Score at least two desks. A second relationship costs one more onboarding and gives you a price to compare on every trade, as well as a fallback when the first desk is closed or declines a size.
Is the desk with the tighter spread always the cheaper one?
The desk with the tighter spread is not always the cheaper one, because separate fees and the time your money is tied up before delivery can outweigh the difference in price. The worked example below is illustrative: the two desks are fictional, the quotes are invented for the calculation, and none of the figures describes a market level.
You want to buy 100 units of a digital asset whose reference midpoint is $60,000, a trade of $6,000,000. Your cash costs you 5% a year, counted on a 360-day year, so one day of $6,000,000 costs $833.33. Desk North quotes 8 basis points over the midpoint, charges a settlement fee of 3 basis points and a flat withdrawal fee of $250, and asks for the cash two days before it delivers. Desk South quotes 12 basis points over the midpoint, with no other fee, and exchanges both legs on the same day.
| Cost line | Desk North | Desk South |
|---|---|---|
| Spread over the midpoint | $4,800.00 (8 basis points) | $7,200.00 (12 basis points) |
| Settlement fee | $1,800.00 (3 basis points) | $0.00 |
| Withdrawal fee | $250.00 | $0.00 |
| Cost of prefunding | $1,666.67 (2 days at 5%) | $0.00 (same day) |
| All-in cost | $8,516.67 (14.19 basis points) | $7,200.00 (12.00 basis points) |
On the quote alone, Desk North is $2,400.00 cheaper. On the whole trade, Desk South is $1,316.67 cheaper. The table also leaves out what cannot be priced so easily: with Desk North, $6,000,000 of your cash sits with the desk for two days before you hold the asset.
The result is not a verdict on either desk. It depends on the prefunding period and on what your cash is worth to you, as the chart shows by holding everything else constant and changing only the number of days.
Worked example with fictional desks and invented quotes. Desk North's fixed charges are $6,850 (spread, settlement fee and withdrawal fee); each day of prefunding adds $833.33. Amounts in the chart are rounded to the dollar.
If Desk North accepted a same-day exchange, or if your cash would have sat idle anyway, its offer would be the cheaper of the two by $350.00. The break-even comes before the end of the first day of prefunding. That is the practical use of the calculation: it tells you what to negotiate. A desk often shortens prefunding once a client has completed a few trades, and the fee schedule is frequently open to discussion at size.
What due diligence should you complete before the first trade?
Before the first trade, complete the due diligence in a fixed order: identity and status first, documents second, a small live trade last. Each step either produces a document for your file or stops the process before money moves.
- Identify the contracting entityObtain the full legal name, registration number, registered address and group structure of the entity that will sign the agreement and receive your funds.
- Verify its status yourselfLook the entity up on the public register of the authority it names, confirm the scope of its permission, and save a dated copy of the entry.
- Screen the entity and its principalsCheck directors and owners against company registries, sanctions lists, court records and published regulatory decisions, as your own compliance policy requires.
- Read the trading agreementConfirm the capacity of the desk, the fee schedule, the settlement terms, the treatment of assets held for you, the events of default and the governing law.
- Review financial standingCollect what the desk can provide: audited accounts, capital information, insurance cover and client references, then set your maximum exposure to the desk.
- Verify payment and wallet detailsConfirm bank details and receiving addresses through a second channel that you already hold, and record who confirmed them and when.
- Agree the recordsObtain a sample confirmation and statement, and check them with whoever keeps your books.
- Place a small first tradeTrade a modest amount through the full cycle, from quote to final receipt, and compare what happened with what was promised before committing size.
Keep the file current. Registrations lapse, permissions change, ownership changes and bank details change, so repeat the register check and the detail verification on a set schedule and before any trade that is much larger than your usual one.
