The Agency Service

When using an agency, the company attempts to match an individual’s requirements with a counter-party through their network of clients. The staff will facilitate a dialogue between them over a secure communications channel such as Signal, Telegram or via a live phone call. Upon agreeing on a price, the two parties will enter into a trade agreement and exchange the crypto asset and fiat currency, either directly or through an escrow service which may be offered by the agency. Alternatively, parties may take advantage of the growing number of custodial solutions now available who can offer more secure cold storage and multisignature options.

Dealership Model

To participate in an OTC trade with a dealer, the party would first contact the desk, detailing their requirements. After passing the KYC and AML tests that the desk has in place, the trading team will establish a secure communications line. At this point, the party would inform the team of the asset type and size required and ask for a quote. It is possible with most services to ask for a two-way quote. A two-way quote allows you to know the bid and ask price, with the resulting spread. Quotes include all fees and commissions and are typically valid for less than a minute and sometimes for as little as 5-10 seconds. In the vast majority of cases, any quote will be a fill-or-kill whereby the trade is executed in full and immediately or is canceled. All desks operate slightly different models, however, they will typically provide different prices according to the size of the trade

Once the party agrees upon a quote, the deal is final. The dealer may already have matching offers available on the other side of the trade or may need to reach out to procure other interested parties. Unlike with an exchange, the trade is not settled until after the execution.

For trades by parties within the same country as the desk, settlement of fiat currency almost always happens within 24 hours while the settlement of crypto assets is much quicker, and is primarily determined by the speed of the asset’s blockchain.There are several benefits to using the dealership model.

Most notably, once you have agreed on a quote, your job as the client is done. There is no need to concern oneself with dealing with counter-parties or bearing the settlement risk yourself.