OTC Risk Screening
OTC risk screening is wallet and counterparty screening applied specifically to over-the-counter crypto trades, run before a trade settles rather than after, since OTC deals typically involve larger sums and less recourse than an on-exchange trade if something goes wrong.
OTC Risk Screening
OTC risk screening is wallet and counterparty screening applied specifically to over-the-counter crypto trades, run before a trade settles rather than after, since OTC deals typically involve larger sums and less recourse than an on-exchange trade if something goes wrong.
What it means
The stakes in an OTC deal make pre-trade screening especially important: a large, privately negotiated trade settles directly between two parties with no exchange order book, no automatic circuit breakers, and often limited legal recourse if the counterparty's funds later turn out to be compromised or sanctioned.
A thorough OTC risk screening checks the counterparty's payment address for sanctions exposure, issuer freeze risk on the specific asset being traded, and source-of-funds red flags in its recent transaction history, ideally completed before price and terms are finalized, not just before the transfer itself.
Real-world example
An OTC desk running risk screening on a new counterparty before a six-figure trade checks the counterparty's wallet for sanctions exposure, freeze risk on the asset involved, and any concerning source-of-funds signals in its recent history.
Related terms
In FreezeRadar
FreezeRadar's pre-send check is built for exactly this moment — screening a counterparty's address before a trade settles, not after.
By FreezeRadar Team
Research and product team behind FreezeRadar.
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