Coinbase launches OTC trading service for institutional investors

OTC demand’s on the rise

Crypto exchange Coinbase has launched over-the-counter (OTC) trading for institutional investors, Cheddar reported on Monday.

OTC refers to trading between parties via a direct dealer network, rather than on a centralised exchange. According to Cheddar, OTC trading usually occurs between investment banks and their clients.

The timing of the launch was an “opportunistic” response to increasing demand amongst clients for OTC trading, according to Coinbase head of marketing, Christine Sandler.

“We launched our OTC business as a complement to our exchange business because we found a lot of institutions were using OTC as an on-ramp for crypto trading,” Sandler said. “We felt this was a huge benefit to our clients to actually leverage both our exchange and our OTC business.”

Though blockchain startup Circle already has its own trading platform, Circle Trade, Sandler said Coinbase’s OTC is unique in the way it handles transactions.

“Circle and a number of others have complementary products, but they also trade on a proprietary basis, so they are the counter-party to each transaction, where we, in fact, are matching client orders.”

The company is also interested in implementing the OTC service with its custody platform, Coinbase Custody, Sandler added.

Coinbase launched its USDC stablecoin last month in collaboration with Circle, which according to Sandler is now “one of the most liquid stablecoins” currently trading. With the stablecoin now “back one-to-one with the US dollar”, Sandler says businesses will be able to leverage the technology of cryptocurrency while mitigating volatility.