What are the risks involved in OTC trading of digital assets?

3 answers

• Jan 06, 2022 · 3 years ago
  OTC trading of digital assets carries several risks that individuals should consider. Firstly, there is a lack of regulatory oversight in OTC markets, which means that investors may be more susceptible to fraud or manipulation. Additionally, OTC trades often involve large transaction sizes, which can lead to increased counterparty risk. It's important for individuals to thoroughly research and vet potential OTC trading partners to mitigate these risks. Furthermore, OTC trading can be less transparent than trading on traditional exchanges, making it more difficult to assess market conditions and prices. Lastly, liquidity can be a concern in OTC markets, as there may be fewer buyers and sellers, leading to potential challenges in executing trades.
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• Jan 06, 2022 · 3 years ago
  When it comes to OTC trading of digital assets, there are a few risks that you should keep in mind. One of the main risks is the lack of regulation in this market. Unlike traditional exchanges, OTC markets are not subject to the same level of oversight, which means that there is a higher potential for fraud and manipulation. Another risk is the counterparty risk involved in OTC trades. Since OTC trades often involve large transaction sizes, there is a greater chance of default by the counterparty. It's important to thoroughly research and vet potential trading partners to minimize this risk. Additionally, OTC trading can be less transparent than trading on exchanges, making it harder to assess market conditions and prices. Lastly, liquidity can be an issue in OTC markets, as there may be fewer buyers and sellers, which can make it more challenging to execute trades.
  878293
• Jan 06, 2022 · 3 years ago
  When it comes to OTC trading of digital assets, it's important to be aware of the risks involved. One of the main risks is the lack of regulatory oversight. Unlike traditional exchanges, OTC markets are not as closely monitored, which means that there is a higher potential for fraudulent activities. Another risk is the counterparty risk. OTC trades often involve large transaction sizes, which means that there is a higher chance of default by the counterparty. It's crucial to thoroughly research and vet potential trading partners to minimize this risk. Additionally, OTC trading can be less transparent than trading on exchanges, which can make it more difficult to assess market conditions and prices. Lastly, liquidity can be a concern in OTC markets, as there may be fewer buyers and sellers, which can impact the ease of executing trades.
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