Many investors are unfamiliar with the concept of an OTC merchant, especially in the context of cryptocurrency platforms like OKX (also known as Okex). In simple terms, an OTC merchant is an individual or entity that buys and sells USDT, the most widely recognized and used stablecoin in the crypto space.
USDT, or Tether, boasts a daily trading volume exceeding $166 billion, making it an ideal instrument for merchants due to its high liquidity and rapid circulation. This article explores how OTC merchants operate on the OKX exchange, their potential earnings, and key considerations for those interested in this role.
How OTC Merchants Generate Revenue
OTC merchants profit from the fundamental needs of cryptocurrency traders. Most traders use USDT as an intermediary currency. For example, when entering the market, they purchase USDT with fiat currency (like USD or EUR) to buy other cryptocurrencies such as Bitcoin or Ethereum. When exiting, they convert their crypto holdings back to USDT and then to fiat currency.
OTC merchants capitalize on this cycle by buying USDT from users who wish to cash out and selling USDT to those who want to enter the market. The profit comes from the bid-ask spread—the difference between the buying and selling price of USDT. By facilitating these transactions, merchants earn a small margin on each trade, which accumulates significantly over high volumes.
To become an OTC merchant on OKX, applicants must meet specific requirements:
Eligibility Criteria
- Account registration time exceeding 30 days.
- Completion of KYC Level 3 verification, including video authentication.
- Minimum order completion rate of 90%.
- At least 1000 successfully processed orders.
- A security deposit of 5000 OKB held in the OTC account.
Note: Merchants may exit voluntarily or be removed due to non-compliance, fraudulent activities, or platform violations. Those who exit voluntarily must wait six months before reapplying. OKX reserves the right to adjust these requirements based on operational needs.
👉 Explore merchant registration details
Daily Earnings Potential for OTC Merchants
Earnings vary based on transaction volume, market conditions, and operational efficiency. Assuming a conservative profit margin of 0.005 USD per USDT, a merchant handling 1 million USDT daily would earn approximately 5000 USD. Monthly earnings could reach 15,000 USD before accounting for fluctuations.
In practice, daily volumes may not consistently hit peak levels. Factoring in a 60% volume consistency, monthly earnings might average around 9,000 USD. This income potential is attractive compared to traditional employment, but it comes with inherent risks.
Key Risks and Challenges
- Price Volatility: If a merchant buys USDT at a higher price than they sell it, they incur losses.
- Regulatory Scrutiny: High-volume fiat transactions may attract attention from financial regulators, potentially leading to frozen bank accounts.
- Security Concerns: Merchants must safeguard against fraud, chargebacks, and money laundering activities.
Despite these challenges, the OTC merchant role remains a viable opportunity for those who adopt disciplined strategies and comply with legal frameworks. Success requires meticulous risk management and a thorough understanding of market dynamics.
Frequently Asked Questions
What is an OTC merchant?
An OTC merchant facilitates the exchange of fiat currency for cryptocurrencies like USDT on platforms such as OKX. They profit from the spread between buy and sell prices, serving as liquidity providers for traders.
How much capital is needed to start?
Apart from the 5000 OKB security deposit, merchants need sufficient fiat and crypto reserves to handle daily transactions. Initial capital should cover potential volatility and operational costs.
Is being an OTC merchant legal?
Yes, but it requires compliance with local financial regulations, anti-money laundering (AML) laws, and platform-specific rules. Merchants must perform due diligence to avoid legal pitfalls.
Can part-time merchants succeed?
While possible, high earnings correlate with volume and availability. Full-time merchants typically achieve better consistency and profitability due to active market engagement.
How does OKX protect merchants?
OKX provides a structured platform with security measures, dispute resolution mechanisms, and eligibility checks. However, merchants must independently manage banking and regulatory risks.
What alternatives exist for smaller traders?
Those unable to meet merchant criteria can still engage in OTC trading as retail users or explore other crypto investment avenues like staking or spot trading.
OTC merchandising offers substantial earnings but demands strategic planning and risk awareness. By adhering to best practices and leveraging reliable platforms, individuals can tap into this dynamic segment of the crypto economy.