Why OTC is a Cost-Effective Solution for digital assets Miners and Hedge Funds

Posted on May 12, 2020 in Articles, Investing, Opinions
Why OTC is a Cost-Effective Solution for digital assets Miners and Hedge Funds
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Does Zipmex Offer OTC?

Over The Counter (OTC) trading has become quite popular over the years. Many exchanges are offering an OTC service, however few that are regulated like Zipmex. When a broker fills out the Zipmex proposal form for OTC, it makes transactions far more secure. The broker can act on behalf of their client to trade and manage their digital assets.

Brokers trading through Zipmex achieve verification via a KYC (Know Your Customer) and letter of intent submission. From here, they can nominate how often they intend to perform a deal (single, daily, weekly or monthly). As Zipmex is regulated, verified brokers can provide their clients with a level of certainty when it comes to security. Something which can be rare for many OTC services offered by other exchanges.

Why Does OTC Exist and Are There Any Risks?

Various hedge funds, traders and investors move around billions of dollars every month, and they need to do it without shaking the market if an investor were to invest 1500 BTC through an exchange they would experience many problems. Some of which include deposit caps and price protection.

For hedge funds and investors, OTC trading is beneficial as it allows the broker to search for market liquidity while offering price protection and anonymity to the investor.

There are many OTC services offered from many exchanges. This growth occurs when smaller exchanges do not have a lot of trading volume; they rely on OTC trading. Such trading desks are set up online and are decentralized. Various miners and early digital assets-traders end up trading this way. With the case of Zipmex, being regulated gives us an advantage as this is essential with auditing and compliance for hedge funds and mining operators.

Before engaging with an OTC method, first, you should do your diligence checks. Look into the track record of the exchange, the people who run the exchange and the levels of regulation.

Second, as an investor, you should find yourself a reputable broker who is trustworthy and follows a code of conduct. With OTC trading there have been reports of settlement risk as trading happens between two parties off the exchange.

The Advantages of OTC Trading with Zipmex


OTC trading provides a level of anonymity. It keeps no track in any digital ledger. Hedge funds, investors and miners prefer to keep their names anonymous when dealing with digital assets, and this is not possible via exchanges or digital wallets.


Popular exchanges do not easily let you liquidate your coins. If you are a miner or investor, you might need to move around some assets, and OTC trading will be perfect. Bitcoin is one of the highly used assets in OTC trading and mainly for liquidity. Bitcoin had quite a lot of early miners and buyers, and they keep looking to liquidate.


Since there is no exchange governing the transaction, and OTC being highly decentralized, they charge minimal fees for transfers (buy or sell also). Regular digital assets exchanges charge quite a hefty amount for transactions, be it buy, sell or trade. But OTC trading through Zipmex has proven to be quite cost-effective for brokers.

No Limit

Zipmex has a daily deposit and withdrawal limit of USD 20,000, but OTC exchanges provide limitless trading. Therefore making OTC an ideal solution for hedge funds, retail and institutional investors.


Since OTC trading generally happens via secure chat rooms, in person or over video calls, you can claim assistance from professional traders and brokers. There are various broker forums you can turn to; however, it is best to seek a trusted individual through a known party than find someone whom you don’t know.

How To Begin OTC Trading With Zipmex?

Zipmex requires a broker to fill in a proposal form through the website. The start of the proposal form requires details of both the broker and client (or alias);

  • Name.
  • Phone.
  • Email.
  • Client Name – We will refer to the client by this name. You can use an alias.
  • Client Location.

Then, the broker needs to select the deal details;

  • Deal Side – Buyer or Seller.
  • Digital assets – BTC, ETH or Other.
  • Volume.
  • Frequency – Single, Daily, Weekly or Monthly.

The final part of the form requires additional information including;

  • Do you have an escrow? – Yes or No.
  • Transaction time frame – ASAP, Next Week, Next Month or Other.
  • Referrer Relationship – Number of steps between you and the client, Direct, One, Two, Three, Four, Five or Greater than Five.
  • Upload a Letter of Intent.
  • Upload KYC Documentation.
  • Process Requirements – Meet In Person, Specific Escrow or Other.
  • Referrer – List email address if you were referred to Zipmex by another client.
  • Additional Information section for other text.

Future of OTC

With more retail and institutional investors shifting to the digital assets world due to a Bitcoin halving year, there might be an increase in the need for liquidity as no regular exchange provides a hassle-free option. Zipmex’s OTC service lets you trade your whole balance and quickly liquidate your assets regardless of the amount.

OTC trading is more accessible, safer and faster than trading via risky offshore accounts. With many exchanges and brokers charging substantial fees on other digital assets platforms, Zipmex’s OTC desk provides an easy pass for retail, institutional investors and miners.

These types of buyers and sellers, mainly from Asian countries, lead trading for OTC. Without the rules and regulations surrounding Zipmex, this method of trading would not be highly preferred. Zipmex’s OTC service needs to verify every transaction and asset that goes through to ensure that no criminal activity occurs. It’s one of the very many reasons why OTC is continuing to be a popular solution for many investors.

If you are a broker and wish to start trading with Zipmex, we encourage you to fill in the Over The Counter proposal form on zipmex.com.