Crypto OTC and prime brokerage is the service that handles very large crypto trades for institutions. OTC stands for over the counter, which means a trade agreed privately between two parties instead of on an exchange's open order book. A prime broker is a firm that gives one institution a single place to trade on many exchanges, to borrow, and to keep its assets.
Why is it needed? On an ordinary crypto exchange, a very large order moves the price. The order book has only a limited number of sellers at each price. So a big buy order uses up the cheapest offers first, and then pays more and more for the rest. Traders call this slippage.
Imagine a fund that wants to buy ₹50 crore of Bitcoin. If it placed the whole order on one exchange, the price might rise sharply before the order was complete. Instead, the fund calls an OTC desk. The desk quotes one fixed price for the whole amount, for example ₹88 lakh per Bitcoin. The fund accepts. The desk then delivers the Bitcoin, often from its own stock or by buying slowly across many markets.
A prime broker goes further. It connects to many exchanges at once. When the fund sends one order, the prime broker's software splits it and sends each part to the exchange with the best price at that moment. This is called smart order routing. The fund sees one account and one report, even though its trades happened in ten places.
The prime broker also holds the fund's assets in one place. This avoids keeping money on many exchanges, where each one is a separate risk. The assets are usually held through MPC wallets and crypto custody, where a key is split between several parties. Some prime brokers also lend to the fund, in the way margin trading works on an exchange.
The same roles exist in share markets. Banks run prime brokerage for hedge funds. Large share trades are often agreed directly between a buyer and a seller, and then done as block deals in a separate trading window of the stock exchange. The crypto version follows the same idea, on top of a blockchain.