How to start a crypto OTC desk: RFQ, liquidity and licensing

How a crypto OTC desk works from request for quote to settlement, principal or agency, liquidity and pre-funding, and the licence it needs: MiCA in the EU, VARA in Dubai, the FCA in the UK.

· Head of IT
· 8 min read
A tall stack of gold coins beside a slate glass bitcoin coin, with matching, custody and exchange blocks

An over-the-counter (OTC) desk trades crypto in size away from a public order book. A client asks for a price, the desk answers with a firm quote, and if the client accepts, the two sides settle directly. Two choices shape the rest: principal or agency, and how money and coins move at settlement.

This guide is general information, not legal advice: the details depend on your services and your market, so confirm them with a lawyer and the regulator before you apply.

How a request for quote (RFQ) works

  1. Onboarding. The client joins as an organisation: company documents and owners first (know your business, or KYB), then each director and trader, plus its settlement bank accounts and wallets.

  2. Request. Within the client's limits, a trader asks to buy or sell, in coins or currency, and sees an indicative price.

  3. Firm quote. The desk takes prices from its liquidity providers, the firms it trades with, adds its margin and returns one all-in price, held for a short validity window.

  4. Acceptance. Accepting inside the window fixes the trade. The desk covers it with its providers, at once or netted with other trades.

  5. Settlement. Currency moves by bank transfer and coins from custody to the client's address, each leg matched to the trade.

A principal desk is the client's counterparty: it sells from its own position, or buys from a provider at the same moment (riskless principal), and carries the price risk until covered. An agency desk executes for the client with a provider or a venue, or passes the order to another firm, for a commission.

The EU: which MiCA services you provide

The EU's Markets in Crypto-Assets Regulation (MiCA), Regulation (EU) 2023/1114, never mentions OTC desks. Article 3(1) defines the services a desk maps to:

  • Exchange of crypto-assets for funds: "the conclusion of purchase or sale contracts concerning crypto-assets with clients for funds by using proprietary capital" (point 19; point 20 covers other crypto-assets): a principal desk.

  • Execution of orders on behalf of clients: "the conclusion of agreements, on behalf of clients, to purchase or sell one or more crypto-assets" (point 21).

  • Reception and transmission of orders: "the reception from a person of an order to purchase or sell one or more crypto-assets or to subscribe for one or more crypto-assets and the transmission of that order to a third party for execution" (point 23).

Holding clients' coins between trades adds custody (point 17). Annex IV sets the permanent minimum capital:

  • Class 1, EUR 50 000: "execution of orders on behalf of clients; placing of crypto-assets; providing transfer services for crypto-assets on behalf of clients; reception and transmission of orders for crypto-assets on behalf of clients; providing advice on crypto-assets; and/or providing portfolio management on crypto-assets."

  • Class 2, EUR 125 000: "any crypto-asset services under class 1 and: providing custody and administration of crypto-assets on behalf of clients; exchange of crypto-assets for funds; and/or exchange of crypto-assets for other crypto-assets."

  • Class 3, EUR 150 000: "any crypto-asset services under class 2 and: operation of a trading platform for crypto-assets."

You hold the higher of that amount and a quarter of last year's fixed overheads (Article 67): Class 1 for an agency desk that never holds clients' coins, Class 2 for a principal desk or one keeping balances.

A principal desk publishes a firm price or "a method for determining the price", publishes its trades' volumes and prices, and executes "at the prices displayed at the time when the order for exchange is final" (Article 77). An agency desk owes clients the best possible result under an execution policy they consent to, and needs their prior express consent to execute outside a trading platform (Article 78). Client money goes to a credit institution or a central bank by the end of the next business day (Article 70). The rest is in the MiCA checklist.

Launching under a licensed partner has a limit: a branded front end passing orders to the partner's desk is itself receiving and transmitting orders. ESMA's interim MiCA register lists each provider's authorised services and countries.

Dubai: VARA's Broker-Dealer Services

In Dubai outside the Dubai International Financial Centre, Broker-Dealer Services need a licence from the Virtual Assets Regulatory Authority, VARA (Regulation III.A.1). VARA's Schedule 1 counts as such both "arranging orders for the purchase and sale of Virtual Assets between two Entities" and "entering into Virtual Asset transactions as a dealer on behalf of the Entity for its own account": principal and agency desks alike, and a front end arranging orders for another desk.

The Broker-Dealer Services Rulebook, version of 19 May 2025 in force since 19 June 2025, adds:

  • Best execution (Rule II.A.1). Dealing as principal, "including as riskless principal", is allowed under the same standard (Rule II.B.1). The exception for discretionary quotes requested by qualified or institutional investors, or another licensee, applies only when you do not deal as principal (Rule II.A.2).

  • Publishing how you set the prices you quote and naming any liquidity source that receives 20% or more of client orders (Rule I.B.1). Your fee is shown before execution and in the confirmation, with the same exception (Rule II.A.6).

  • Margin trading, financing a client's purchase against collateral, only if VARA explicitly authorises it in your licence (Rule III.A.1).

Paid-up capital is the higher of AED 600,000 or 25% of fixed annual overheads or, when "using a VASP Licensed by VARA to provide Custody Services or otherwise approved during the licensing process", the higher of AED 400,000 or 15% (Company Rulebook, Part VI, version of 19 May 2025). Schedule 2 sets an AED 100,000 application fee and an AED 200,000 annual supervision fee. Steps and staffing: see the VARA licence guide. In Abu Dhabi Global Market you need a Financial Services Permission from its regulator, the FSRA; the UAE guide compares them.

The UK: FCA registration now, authorisation from October 2027

A firm "exchanging, or arranging or making arrangements with a view to the exchange of" cryptoassets is a cryptoasset exchange provider (Money Laundering Regulations, regulation 14A) and may not act as one until it is on the FCA's register (regulation 56). That catches both models: see the FCA registration guide.

From 25 October 2027, the Cryptoassets Regulations 2026 make dealing as principal, dealing as agent and arranging deals regulated activities, each with exclusions to check. Under the FCA's final rules (PS26/12), permanent minimum capital is £750,000 for dealing as principal and £75,000 for dealing as agent or arranging deals. The application period runs from 30 September 2026 to 28 February 2027.

The decisions that shape the build

  • Liquidity providers. Each onboards you with its own KYB and connects by API; several give competing prices and a fallback. You pre-fund each, tying up capital, or settle net on a credit line.

  • Pre-funded or on credit. Waiting for the client's money or coins before trading is safe, but you hold client assets. Credit lets trusted clients pay after the trade: it needs limits, collateral, agreements and a plan for default.

  • The validity window. Short limits your price risk; longer suits clients needing internal sign-off. Either way, define when an order is final.

  • One dealer or many. A MiCA trading platform brings together "multiple third-party purchasing and selling interests" (Article 3(1), point 18). A screen where several providers answer clients' requests may be one: Class 3.

  • Channels. App, portal, API or chat: every order reaches one record, which MiCA requires you to keep for five years (Article 68(9)).

The Travel Rule on every transfer

Under the EU's Transfer of Funds Regulation, applied since 30 December 2024, every crypto transfer carries originator and beneficiary details. For more than EUR 1 000 to or from a self-hosted address, one not linked to a crypto-asset service provider or a similar firm outside the EU, you must "take adequate measures to assess whether that address is owned or controlled by" your client (Articles 14(5) and 16(2)), so approving a client's wallet for deliveries (whitelisting) should include proof of control. UK and UAE rules differ: see the FCA and VARA guides.

What drives the cost

  • Licence and capital class: principal or agency, custody or not. Capital is held, not spent.

  • Working capital: pre-funding at providers, inventory, and the float to deliver before clients pay.

  • Custody: a provider or your own keys, plus insurance (VARA requires crime cover for coins in hot wallets: Company Rulebook, Rule VI.D.1).

  • Banking: client money accounts and payment rails per currency.

  • Compliance and people: screening, monitoring and Travel Rule tools; traders, compliance, risk and settlement staff.

  • Software: client app or API, quoting, integrations, a ledger reconciling both legs, the backoffice.

Common mistakes

  • Re-pricing after acceptance. A MiCA principal desk executes at the price displayed when the order is final.

  • Calling back-to-back trades agency. VARA treats riskless principal as principal dealing.

  • Leaning on reverse solicitation. MiCA exempts a non-EU firm only when an EU client acts "at its own exclusive initiative", and any solicitation in the EU ends that, "notwithstanding any contractual clause or disclaimer" (Article 61).

What this means for your platform

Our white-label crypto OTC desk follows this flow, from KYB onboarding to firm, all-in quotes held for the window you set. Liquidity comes through the FX module from providers such as B2C2, Wintermute and Cumberland, or your own counterparties. Trades book to the ledger at the quoted price, bank payments are matched to trades, and coins leave custody on Fireblocks, BitGo, Copper or your own keys under your approvals, with Travel Rule messaging through Notabene, Sygna, 21 Analytics or TRP.

The RFQ screens are built for you on these modules, already in production. Credit limits and deferred settlement, a client API or a sales-trader console make it a custom build of 2 to 3 months, and the source code is yours. It is a starting point: the same modules assemble a crypto exchange, a crypto on-ramp or whatever you have in mind.

Sources

All checked on 7 October 2026.

Written by

Paynoramic's Head of IT

Head of IT

Head of IT at Paynoramic, responsible for the module library every platform is built from. Has worked on payment, banking and workforce platforms for companies including American Express, Teya and Indeed Flex, and for a global card issuer-processor. Writes about what a fintech or crypto launch needs beyond the software: licensing, certification and the real cost.

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