Payment firms using margin-based OTC unlock capital. They must vet desks for credit, not just price. Here's what changed and what to watch.
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Payment firms that rely on crypto OTC desks for stablecoin conversions are facing a structural shift. The old model of wiring the full trade value upfront is giving way to margin-based settlement, where the desk extends credit against a fraction of the limit. That change unlocks working capital. It also turns the OTC desk into a counterparty with a lending book, not just an execution venue.
The shift has been accelerating since 2024-2025 as stablecoin volumes surged and operators – PSPs, EMIs, regional exchanges – demanded better capital efficiency. The naive take is that margin-based OTC is simply cheaper and faster. The practical market read is more layered: the desk must now assess credit risk, extend limits, and manage settlement exposure, functions closer to prime brokerage than spot trading.
The early OTC desk model was straightforward. A client wired the full trade value upfront, the desk executed, and assets settled when banking rails cleared. That setup worked for hedge funds moving directional exposure on their own timeline.
It broke down when the client base shifted to operators running continuous crypto-fiat flows. For these firms, full pre-funding is not an inconvenience. It is a structural drain on working capital. A PSP processing €50 million monthly in stablecoin conversions with T+1 settlement and full pre-funding carries €1.5 million to €3 million of trapped capital every day. That expense scales linearly with volume.
Under a margin model with post-trade settlement, the client posts a fraction of the trading limit as collateral, not the full notional of every trade. The trade settles in roughly 30 minutes, the limit resets, and the client’s working capital stays in its own accounts instead of frozen on a counterparty’s balance sheet. For a business running €10 million in monthly volume, that is the difference between tying up €10 million and posting a fraction of it.
FinchTrade, a Swiss-regulated OTC desk, illustrates the model. Since 2025, it has processed more than €1 billion in client trading volume, almost entirely for operator clients. It operates under VQF supervision and holds ISO/IEC 27001 and 27701 certifications. Its banking connectivity spans European, African, and Latin American rails, with settlement cycles around the clock at roughly 30 minutes.
The primary beneficiaries are payment businesses with continuous stablecoin flows. Every euro locked in a settlement account is a euro not earning yield or funding operational needs. Under margin trading, that capital becomes deployable – a treasury upgrade.
The risk bearer is the client who now holds counterparty credit exposure to the OTC desk. If the desk miscalculates its credit exposure or suffers a liquidity shock, the client’s settlement could be delayed or impaired. The client’s own compliance team must vet the desk’s regulatory standing, capital adequacy, and settlement controls.
A desk that enforces thorough AML and KYB onboarding to a high standard reduces the due diligence burden on the client. When the counterparty holds certifications like ISO 27001 and operates under a recognized regulator such as Swiss VQF, the compliance team can approve the relationship without a six-month review. The same controls that underpin favourable settlement terms are the controls that keep the client’s own flow clean.
The shift affects stablecoins (USDT, USDC) most directly, as they are the primary instruments in payment conversions. BTC and ETH are also affected when used as settlement bridges for cross-border transfers. Exotics and low-liquidity tokens are rarely held by PSPs or EMIs, so the model change has less impact there.
As margin-based OTC desks compete for payment clients, stablecoin spreads may tighten further. The desk’s revenue shifts from spread income to credit income, effectively charging a financing rate on the margin limit. For the client, the all-in cost may become comparable to a traditional FX forward, with the added benefit of 24/7 settlement.
The SEC’s recent scrutiny of crypto lending products and the CFTC’s focus on broker-dealer registration create tail risk. A desk that positions its margin trading as “pre-settlement credit” rather than a loan may avoid classification, the line is thin. Payment firms should confirm that their OTC counterparty is not structuring margin in a way that triggers securities or commodities lending rules.
For PSPs and EMIs assessing a margin-based OTC relationship, the following factors matter beyond price:
Payment firms that survived the 2022 crypto credit crunch learned that counterparty selection is more important than price. The shift to margin-based OTC repeats that lesson with a twist: the counterpary is now also a lender. Vetting creditworthiness, not just execution quality, is the new standard.
For a firm processing €10 million in monthly crypto-fiat volume, moving to a margin-based OTC desk can unlock €2-3 million in formerly trapped capital. That is a treasury upgrade worth examining. The upgrade comes with a new set of risks around counterparty credit, settlement timeliness, and regulatory alignment.
Watch for broader adoption signals. If major banks or prime brokers begin offering margin-based crypto OTC to payment clients, the model will become the norm. If regulators issue guidance defining margin as credit, the model will retrench. Either way, the era of full pre-funding for operational crypto flows is ending.
For broader context on crypto market infrastructure and broker selection, see AlphaScala’s crypto market analysis and coverage of Coinbase’s Deribit deal, which opens new settlement channels for institutional crypto.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.