Over-the-counter trading (OTC) is the means of direct asset buy and sell between the sellers and buyers, and not through a public exchange. In the case of cryptocurrency, OTC desks manage large transactions with complete discretion and thus prevent sharp price fluctuations in the open market caused by the transfer of large amounts of Bitcoin, Ethereum, or stablecoins.
OTC is usually the preferred option by organizations, wealthy individuals, and companies that constantly need liquidity. Rather than placing a large order via a normal exchange, where one would experience an instant price swing, the buyer and seller come to terms off-exchange. After both parties have agreed on the price, the assets are then exchanged through secure methods oftentimes with the aid of a broker or specialized OTC desk.
The benefits of these desks include the customized service, improvement in the case of massive volumes pricing, and the faster settlement. Additionally, they offer more privacy since OTC trading is not listed on public order books. This is one of the reasons why large players choose OTC for million-dollar transactions; they need confidentiality.
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On the other hand, OTC trading is based on trust and good verification processes. Trustworthy desks comply with KYC and AML checks to scam and to launder money.
To summarize, OTC trading is a hidden part of the crypto market where great transactions take place without being noticed and without having an impact on public exchange prices.