What is Over-the-Counter (OTC) Trading?

Over-the-counter (OTC) trading is typically a process where an agreement to purchase a specific asset is completed between two parties without the need for a centralized exchange (CEX). OTC desks are usually used to purchase large quantities of an asset in order to improve transparency, save time and fees, and to maintain security of the asset purchased. Usually, OTC trading involves a third-party custody solution. Also, OTC desks often trade assets or securities that are unlisted on regular crypto exchanges, because smaller exchanges do not meet the regulatory requirements to list the specific asset.