Coinbase is Preparing to Launch an Over-the-Counter Block Trade

The company Coinbase is preparing to launch its own OTC block trading service. It is assumed that this service will have a positive effect on the stabilization of prices and the accuracy of the order execution.

What tasks will OTC trading solve?

The main purpose of the OTC block trading conducted outside the exchange order book is to attract players with a large “potential” in the wallet who are interested in the possibilities of cryptocurrency trading to this market. At the time of writing, the capitalization of the cryptocurrency market was about $437 billion, while the growth is $26 billion per day.

It is difficult not to notice a significant increase in the relevance of over-the-counter trade in the cryptocurrency market over the past month. The world’s largest OTC-exchange collected such a volume of transactions in just one month, which amounted to about $2 billion per month, while the other cryptocurrency areas collected more than $100 million on the conducted transactions, while the cost of minimum transactions varies ranging from $75 thousand to $250 thousand.

Why was this decision made?

This was the basis for the solution offered by Coinbase and its subsidiary GDAX to institutional traders from 2014 onwards. The decisive stage in attracting large players that have a significant impact on the market is support for block OTC trading.

It became known from an interview of Business Insider with the founder of the consulting company Tabb Group, Larry Tubb, that it is possible that OTC will become the main service for exchanges that are engaged in attracting institutional funds to the digital currency markets.

In addition, there was information about hiring the head of the market structure by Coinbase, which contributes to the study of new types of orders, liquidity incentive programs and funds that provide market security. Tubb believes that such stimulation will increase the institutional liquidity of the GDAX.

What does innovation mean?

By and large, off-exchange trading will probably give significant advantages to traders who are targeting digital currency markets. The Coinbase service will provide many new features that will smooth the slippage of tariffs, which usually follow large transactions, especially in markets with little activity, usually in the case of unclaimed digital currencies.

Despite the rapid development of block OTC trading, there is still a number of outstanding problems. For example, there are no clearly formulated rules on the part of regulatory bodies in the US, which affects the work of companies on the territory of the country. According to the Commodity Futures Trading Commission (CFTC), Bitcoin is a commodity, and the Securities and Exchange Commission (SEC) says that it’s time to make most of the currency and tokens securities.

Subscribe to The Coin Shark news in Twitter: https://twitter.com/the_coinshark