The cryptocurrency industry is entering a new phase where the biggest risks and safeguards are no longer defined by price volatility but by where and how institutional trades are executed, according to a report.

The report, by Finery Markets, shows that crypto spot over-the-counter (OTC) trading volumes surged 109% year over year, far outpacing growth on centralized exchanges and defying earlier industry forecasts that projected a far more modest expansion.

The data points to a structural shift in institutional behavior, with large market participants increasingly routing trades away from public order books and into private, bilateral execution venues.

Rather than reflecting speculative excess, the report frames OTC growth as a deliberate response to market stress, execution risk, and the evolving needs of professional traders operating at scale.

OTC Markets Act As Shock Absorbers During Volatility

The most revealing data point in the report centers on October 2025, when a major stablecoin depegging event triggered nearly $20 billion in liquidations across crypto markets over a 48 hour period.

During that window, public exchanges experienced sharp liquidity fragmentation, visible liquidation cascades, and extreme collateral repricing.

OTC venues, by contrast, continued to function through private liquidity pools and bilateral pricing mechanisms, allowing large trades to clear without broadcasting stress signals to the wider market.

According to Finery Markets, this dynamic prevented a broader feedback loop that could have amplified systemic risk across exchanges.

The episode highlights a growing divergence in market roles.

Public exchanges increasingly serve as venues for price discovery and retail participation, while OTC infrastructure is evolving into a stability layer designed to contain volatility during periods of market stress.

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Stablecoins Become The Core Of Institutional Settlement

Stablecoins emerged as the dominant asset class within OTC markets in 2025, accounting for 78% of all OTC trading volume, up from 26% just two years earlier.

The shift shows how institutions are using stablecoins less as speculative instruments and more as dollar-denominated settlement rails linking on-chain liquidity with traditional finance.

The report argues that this trend redefines where systemic risk resides.

As stablecoins become the primary medium of exchange for institutional cryptocurrency trading, vulnerabilities shift away from token price swings and toward the resilience of secondary market infrastructure, settlement processes, and liquidity access during periods of stress.

This evolution also mirrors patterns seen in traditional financial markets, where institutions historically migrated from transparent venues to private execution once scale, capital efficiency, and discretion became more important than continuous public price discovery.

OTC Growth Signals Market Maturation, Not Fragmentation

While centralized exchange spot volumes grew just 9% in 2025 and decentralized exchange activity fluctuated sharply with market sentiment, OTC trading showed steady, compounding growth throughout the cycle.

Finery Markets positions this divergence as evidence of market maturation rather than fragmentation.

As cryptocurrency integrates more deeply with institutional balance sheets, the report suggests that the ecosystem is beginning to resemble mature FX and fixed-income markets, where a significant share of volume occurs off-exchange to reduce market impact and execution risk.

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