Crypto exchange vs OTC trade: who holds the asset until settlement

The difference between a crypto exchange and an over-the-counter trade comes down to whom you hand your asset to, and for how long. On an exchange, you transfer your coins to the platform's account, trade entries in its internal database and carry the risk of the platform itself. In an OTC deal, you settle directly with the counterparty and carry the risk of the specific person on the other side of the transfer. Price is secondary here: the custody mechanics and the moment of settlement determine what exactly can go wrong.

Order book versus direct agreement

A crypto exchange matches orders in a shared order book: bids and offers sit side by side, and a trade is executed automatically when prices cross. Liquidity is pooled in one place, the price is visible to every participant and execution is instant. The cost of this is centralisation: until you withdraw them, the coins sit at the exchange's addresses, and your balance exists only as a line in its accounting system.

An over-the-counter trade works differently, and the logic is the same as in the securities market: our piece on the over-the-counter market describes exactly this principle — trades without an order book, at a price agreed between the parties. There is no shared queue of orders. There is a counter-offer, a negotiation of terms and settlement — in cash, by bank transfer or through an escrow intermediary. That is also why no single rate exists: the over-the-counter exchange rate is set separately in each deal, and it diverges from the exchange rate all the more, the larger the amount and the thinner the market for the particular pair.

Where the risk arises, and when

Exchange risk is concentrated: the platform can restrict withdrawals, freeze an account under a compliance procedure or cease to exist. Such events are rare, but they hit the entire balance at once. OTC risk is distributed: it arises afresh in every deal and always at the same point — between the moment one party has handed over its side and the moment the other party delivers in return.

This is precisely the gap that escrow and P2P services close: the platform temporarily holds the seller's cryptocurrency, the buyer sends the money, the seller confirms receipt and the coins are released. The scheme removes the risk of non-performance, but not the risk tied to the origin of the money — the transfer you receive may turn out to be part of someone else's fraud chain, and in that case the questions about your account will come from your bank, not from the counterparty.

The legal framework in Russia

Under Russian law, digital currency is property but not a means of payment: it cannot be used to pay for goods and services inside the country. Owning, buying and selling it, however, is legal. Digital financial assets issued under the 2020 law within the Russian regulatory framework are a separate matter — a different instrument with a different legal status, and they should not be confused with exchange-traded cryptocurrencies.

Income from selling digital currency is subject to personal income tax. Since 2025, it has fallen into the same tax base as income from securities transactions: 13%. Unlike with a Russian broker, you usually have no tax agent — you file the return yourself and must document your acquisition costs with papers that, in a cash deal, often simply do not exist.

This leads to a practical conclusion that has nothing to do with rates: in a crypto deal, a paper trail has to be created deliberately, because by default there is none.

What this site will not show you

A fair disclaimer: TradeAlmanac does not carry a cryptocurrency quotes feed. Our database covers the Russian exchange market: stocks, bonds, funds. So you will find neither exchange rates nor the order-book depth of any particular crypto exchange here, and any such figures from general-interest articles are worth checking against the source. It makes sense to compare the OTC rate across several independent aggregators at once — the divergence between them says more about the pair's liquidity than any single figure.

How to choose between the formats

An exchange is the right choice when speed, the ability to split a trade into small parts and the option to exit at any moment matter: small and medium amounts, frequent transactions, a well-understood pair. An OTC trade is justified when the amount is so large that going through the order book would move the price against you, or when you need a specific settlement method the exchange does not support.

Step 1: establish who holds the asset in the interval between handing it over and receiving the counter-payment. Step 2: find out what happens if the other party disappears during that interval. Step 3: put the terms in writing, even if you know the counterparty. If the answer to the second question is "nothing can be done", reduce the size of the deal to an amount you are prepared to lose.

We keep the terminology for both formats in our glossary, where crypto exchange and over-the-counter market are also covered as separate concepts.