How to become an OTC broker?

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Can I Give you suggestion ?
Start low level like, If you want to become OTC on crypto, Start with localbitcoin , start providing service their.
Use white label solution, Just start at small scale , learn how things works ..
You will be achieve what you what to become.

Bitcoin OTC web of trust should be a good start. Other than that I don't really know of any other source of information on this.
I am assuming that websites like localbitcoins and bitcoin-OTC connect buyers and sellers, but where is the room for the broker here? In a certain way, isn't localbitcoins and bitcoin-OTC the broker? Just like a p2p exchange?

I am interested in setting up a service, not investing my own money in the crypto market and trading. Would localbitcoins and bitcoin-OTC provide a platform wherein I can link buyers and sellers and make $$$ as the market maker? Does OTC brokering work by, for example, finding a buyer on one platform and connecting that buyer to a seller that I find on another platform? Where do these independent, smaller-scale OTC brokers interact with their clients and other brokers? From what you guys are saying, it sounds as if becoming a successful OTC broker is all about networking.
 

Simon4466

Mentor Group Light (Private use!)
I am interested in setting up a service, not investing my own money in the crypto market and trading. Would localbitcoins and bitcoin-OTC provide a platform wherein I can link buyers and sellers and make $$$ as the market maker? Does OTC brokering work by, for example, finding a buyer on one platform and connecting that buyer to a seller that I find on another platform? Where do these independent, smaller-scale OTC brokers interact with their clients and other brokers? From what you guys are saying, it sounds as if becoming a successful OTC broker is all about networking.
How do you think to compete with an OTC desk of an FTX who has billions of liquidity and large institutional clients whilst offering low spreads and no additional fees (according to its website)? It's much more than just networking on its own, FTX for instance had to spend hundreds of hours learning how to execute these trades to minimize price action in the markets.

What you are considering is just you being a middle-man between two traders, which will therefore just happen on the open market, not adding any value there (if I am wrong here, please explain your value proposition). Starting an OTC brokerage is quite difficult by itself, even if you know all the ins and outs of it.
 

diatessaron

Silver Member
I am assuming that websites like localbitcoins and bitcoin-OTC connect buyers and sellers, but where is the room for the broker here? In a certain way, isn't localbitcoins and bitcoin-OTC the broker? Just like a p2p exchange?

I am interested in setting up a service, not investing my own money in the crypto market and trading. Would localbitcoins and bitcoin-OTC provide a platform wherein I can link buyers and sellers and make $$$ as the market maker? Does OTC brokering work by, for example, finding a buyer on one platform and connecting that buyer to a seller that I find on another platform? Where do these independent, smaller-scale OTC brokers interact with their clients and other brokers? From what you guys are saying, it sounds as if becoming a successful OTC broker is all about networking.
Localbtc and similar websites only play the role of an escrow agent. You need your own website to present what you offer. Localbtc has a 1% fee the seller has to pay, too much for an OTC broker.

OTC brokers don't connect buyers and sellers, they are the buyer and seller. Don't know about small scale ones to be honest, if your goal is to start a small OTC broker then you have to get involved in what I mentioned previously, small trades won't make you money.
 
How do you think to compete with an OTC desk of an FTX who has billions of liquidity and large institutional clients whilst offering low spreads and no additional fees (according to its website)? It's much more than just networking on its own, FTX for instance had to spend hundreds of hours learning how to execute these trades to minimize price action in the markets.

What you are considering is just you being a middle-man between two traders, which will therefore just happen on the open market, not adding any value there (if I am wrong here, please explain your value proposition). Starting an OTC brokerage is quite difficult by itself, even if you know all the ins and outs of it.
I get what your saying in regards to this not being a smart business idea for me to follow. Right now I am just very interested in how OTC brokers work and how one can on-ramp and off-ramp large amounts of crypto without using a formal exchange.

OTC brokers don't connect buyers and sellers, they are the buyer and seller. Don't know about small scale ones to be honest, if your goal is to start a small OTC broker then you have to get involved in what I mentioned previously, small trades won't make you money
Again, thank you very much for your informative response Diatessaron! What confuses me is your statement that OTC brokers don't connect buyers and sellers, they are the buyer and seller. Wouldn't this, by definition, mean that they are not brokers? Wouldn't they be more similar to an exchanger? If you have the time, can you really describe how this all works? I previously thought that OTC brokers merely connect buyers and sellers and then collect a commission. But from what you're saying OTC brokers are more like professional, off-exchange traders. I am honestly just trying to learn about how all this works, especially when it comes to on-ramping and off-ramping crypto. Now I know that this is not so simple haha. Thanks again for all your help! If you have the time and its not a hassle, please explain more :) .
 

diatessaron

Silver Member
I get what your saying in regards to this not being a smart business idea for me to follow. Right now I am just very interested in how OTC brokers work and how one can on-ramp and off-ramp large amounts of crypto without using a formal exchange.


Again, thank you very much for your informative response Diatessaron! What confuses me is your statement that OTC brokers don't connect buyers and sellers, they are the buyer and seller. Wouldn't this, by definition, mean that they are not brokers? Wouldn't they be more similar to an exchanger? If you have the time, can you really describe how this all works? I previously thought that OTC brokers merely connect buyers and sellers and then collect a commission. But from what you're saying OTC brokers are more like professional, off-exchange traders. I am honestly just trying to learn about how all this works, especially when it comes to on-ramping and off-ramping crypto. Now I know that this is not so simple haha. Thanks again for all your help! If you have the time and its not a hassle, please explain more :) .
An exchange is just a middle man between a buyer and a seller. An exchange does not buy or sell coins. Order books are filled by random people who are buying and selling. The exchange takes it's own fee whenever you sell or trade. So basically, when you buy at Binance it's not Binance that sold you the coins, it's someone else who also uses Binance.

Say Kraken OTC for example will buy from you right now even if they don't have someone else they can sell to. That's because market conditions are in their favor, chances of BTC going higher are high.
 
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