Max Korpusov

The Impact of Regulatory Developments on OTC Trading in Cryptocurrencies

As the crypto market has grown in the past few years, the problem of risk to market integrity and consumer protection has become more and more significant. This has brought regulatory bodies to the fore, sparking the need for comprehensive global regulatory policy approaches and supervisory frameworks to be put in place. The financial ecosystem is evolving at breakneck speed, with digital assets becoming increasingly interconnected with traditional financial systems. This has resulted in countries globally researching, legislating, and consulting to bring such assets under existing financial services frameworks. While the speed of action, approaches adopted, and definitions used remain fragmented, regulatory bodies globally have increased their push for international cooperation, signaling a drastic change and raising the bar for firms involved in digital assets.

The Rise of OTC Demand

Since the collapse of FTX in November of 2022, the demand for OTC crypto markets has been increasing quickly. OTC trading platforms are now a common destination for large crypto trades, as they offer numerous benefits over traditional exchanges. These benefits include:
  • better pricing;
  • faster execution times;
  • increased privacy.
Additionally, traders can avoid slippage and order book thinness, enabling them to execute trades without significant fluctuations in prices.

Regulatory Guidelines and Institutional Adoption

As some people advocate for increased regulation to improve trust and security in crypto trading, potential regulatory guidelines could lead to institutional adoption and partnerships between licensed banks and OTC platforms for crypto services. One such bank is EQIBank, a licensed and regulated bank that provides crypto-friendly banking and direct in-house crypto trading worldwide.
More banks may follow suit in the future, creating more opportunities for trading. In this case, the OTC trading platform's influence will grow.

Financial Action Task Force Guidelines

The Financial Action Task Force (FATF) has been working on updated guidelines for a risk-based approach to digital assets and virtual asset service providers (VASPs). These guidelines aim to provide clearer guidelines for regulators and financial institutions in dealing with digital assets. One specific requirement is the "travel rule", which mandates that financial institutions share data on transactions beyond a threshold to prevent terrorist financing, money laundering, and suspicious activities.


In July 2022, the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions released a report outlining the guidelines for determining whether a stablecoin arrangement is systemically important. These arrangements are considered to be crucial for financial market infrastructures, and as such, the report proposes guidance on governance, risk management, and settlement finality. It's a complex issue, but the report provides much-needed clarity for national authorities to ensure the stability of the financial system.

Crypto Fintech

The Fintech Task Force of IOSCO has taken the initiative to issue a Cryptocurrency Roadmap for 2022-2023.
Their plans and activities will focus on two work streams:
  • Cryptocurrencies and other digital assets
  • DeFi sphere
The main goal is to provide final policy recommendations that can help bring more structure and stability to the world of fintech and ensure everyone's protection by the end of 2023. The roadmap is an effort to facilitate fintech progress and make it more accessible to everyone.


OTC trading platforms are increasingly becoming the go-to for investors looking to conduct large trades without encountering slippage or order book thinness. The rise of dedicated OTC crypto platforms has been a response to the growing demand of the industry and the increased regulations placed on centralized exchanges. With regulatory guidelines the growth of OTC markets is only set to continue. Crypto traders would be wise to consider OTC platforms for large transactions while enjoying the benefits of privacy, speed, and better pricing than centralized exchanges.

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