At the time, as most people use the classic bitcoin exchanges for sale and purchase of bitcoin, institutional investors, operating large amounts of money are forced to sell the digital asset over the counter (OTC) market. According to the publication Forbes, crypto currency exchange not yet able to offer institutionalism secure infrastructure and the high level of liquidity.
Forbes spoke with representatives of the traditional market involved in the crypto-trading, and outlined their vision of actual CryptoRandom.
As is known, many exchanges limit the size of orders that forces you to split the transfer into many pieces when carrying out large transactions. Besides, on exchanges real risk of slippage when trades are executed at a price different from that specified. Many institutional investors are not willing to put up with these features.
Professionals believe that the OTC market eliminates such risks, is safer and does not impact directly on the course. Also OTC deski allow large traders to quickly hedge risks in the Fiat. Experienced OTC traders note the unreliability stabilio and emphasize that the opportunity to have Fiat on the exchange does not always mean that it can be withdrawn.
«Now, some members of the cryptocurrency industry organized a network of OTC sites, working in Skype, Telegram and even LinkedIn,» says Frank Wagner, managing partner of cryptocurrency investment company INVAO.
«On the structure of the OTC market at the moment is almost the only option for trading marketable digital assets. However, it is clear that the OTC market still is not the safest and most effective way cryptocurrency trading this is the reason that many institutional investors refrain from participating in cryptogra».
Institutional investors impose very severe requirements for trading venues compared to retail investors. As a rule, the money they invest is not their own, so institutionally have to follow strict internal and external regulations, ensuring maximum safety of all processes.
Many large participants in the OTC market agree — in order to trade on the OTC markets, you need to be confident in the broker. Meanwhile, they note that trust is good but control is even better. Especially when we are talking about the fabulous sums of money. In order for institutional investors to be able to feel comfortable making deals in bitcoin, even on the OTC-deckah, it is necessary to solve a number of issues:
- First, in order for counterparties to manage risks efficiently has to be defined a single legal standard, which will follow each.
- Second, the market needs a comprehensive and reliable trading infrastructure that would meet the requirements of institutional investors. OTCXN and Caspian are examples of companies that develop software systems for clearing and risk management when trading in cryptocurrency, which used traditional investors.
- And third, according to some institutional investors, the bitcoin industry needs more professional blockchain trading company who understand the demands and culture of the institutional investors.
Still need serious regulatory work, a variety of custodial solutions and tools to protect bitcoin market manipulation, hacks and jumps of the course to institutional investors could feel confident and proceeded with more aggressive behavior, even in OTC cryptocurrency space.
«OTS regulated like a traditional stock exchange, but the industry still lacks many of the solutions in order to convince mainstream investors in its reliability.»
Recall that, according to the results of international research company TABB Group, is OTC market of bitcoin is much larger in volume than the global exchange market of crypto-currencies. According to them, OTC-deski worldwide processes more than $12 billion of bitcoin transactions per day on a regular basis.