US-based crypto exchange Kraken announced a major expansion to its over-the-counter (OTC) trading services. The announcement hints a set of ultracompetitive advantages to institutional investors and wealthy individuals looking to invest in large block trades without giving specific details.
Last Monday, Sept. 17, Kraken reported on its official blog about expanding its OTC trade services, enhancing large block trade executions for its clients worldwide. The blog entry reads:
“We offer deeper liquidity and private, personalized service to institutions and high net-worth individuals needing to fill large orders. Whether you are trading blocks of $100,000, €100,000,000 or 2,000 Bitcoin, the OTC desk will provide you will execution and settlement services that are discrete, secure and ultra-competitive.”
The portfolio of assets supported by Kraken and made available for large block trades count 17 cryptocurrencies, including Bitcoin, Ether, Litecoin, Ripple’s XRP and Dash, along with three fiat currencies (US dollars, euros and Japanese yen).
Kraken reportedly appointed a team of nine professional traders to be in charge of its OTC services, stationed across three continents (Europe, North America, and Asia).
The team promised a “hi-touch” service at every step of the trade cycle from initial consultation all the way to settlement.
The minimum order size was set at $100,000, with exceptions to be discussed on a case-by-case basis.
What Is the Difference Between OTC and Exchange-Based Trades?
According to Investopedia, financial securities, including stocks and bonds, can be traded in one of two ways: either on an exchange or over the counter. In fact, while exchanges are a centralized and regulated market where listed securities are traded in a standardized and publically transparent manner, many companies do not meet the listing requirements for an exchange or do not want to pay the cost. These companies could have their securities traded over the counter. The same principle applies to digital assets, which can either be listed in cryptocurrency exchanges or traded over the counter granting substantially more privacy. The latter suits for some large institutions that seem reluctant to publicly report their crypto investments just yet.
In fact, OTC trading happens through a decentralized dealer network. Broker-dealers negotiate directly with each other over computing networks or by phone. This allows smaller company stocks and nonstandard quantities of any given assets to be traded. OTC entails less public transparency since prices are not disclosed publicly until after the trade is complete.
Kraken Looks to Have Had Better Days in the Past
Kraken, known to be the world’s largest exchange in euro volume and liquidity, found itself in hot water lately over claims of a security breach that led to laying off 57 employees. According to its chief executive officer, Jesse Powell, these speculations that surfaced on social media were unfounded. Powell described the measure as a cost-saving one that “will have zero impact” on the quality of the exchange services. The laid-off workers represent in fact 10% of its San Francisco based client service team.
Speaking to Bloomberg on Sept., Powell said:
“Rumors of a security breach are entirely unfounded. No other teams are affected and we are still aggressively hiring in all areas.”
More recently, on Sept. 18, Attorney General Barbara Underwood referred Kraken to the New York Department of Financial Services for a possible violation of digital currency regulations and stated that it might be operating illegally in the state of New York. Kraken is named among other exchanges, including Binance and Gate.io.