CRYPTOCURRENCY OTC TRADING AGREEMENT

Agreement Date: [DATE]

Agreement Number: [OTC-XXXX-XXXX]

PARTIES

OTC DESK/COUNTERPARTY A:
- Legal Name: [PARTY A NAME] ("Party A" or "Desk")
- Address: [ADDRESS]
- Email: [EMAIL]
- Regulatory Status: [MSB/LICENSED/OTHER]

COUNTERPARTY B:
- Legal Name: [PARTY B NAME] ("Party B" or "Client")
- Entity Type: ☐ Individual ☐ Corporation ☐ Fund ☐ Other: [SPECIFY]
- Address: [ADDRESS]
- Email: [EMAIL]

RECITALS

WHEREAS, the parties wish to establish terms for over-the-counter (OTC) trading of cryptocurrency and digital assets;

WHEREAS, OTC trading allows for execution of large transactions outside of public exchange order books;

NOW, THEREFORE, the parties agree as follows:

ARTICLE 1: DEFINITIONS

1.1 "Base Currency" means the cryptocurrency or digital asset being bought or sold.

1.2 "Confirmation" means the written or electronic confirmation of a Trade.

1.3 "Quote Currency" means the currency (fiat or cryptocurrency) in which the price is denominated.

1.4 "Settlement" means the delivery of assets and payment pursuant to a Trade.

1.5 "Trade" means a transaction executed under this Agreement.

1.6 "Trade Date" means the date on which a Trade is executed.

1.7 "Settlement Date" means the date on which Settlement occurs.

1.8 "RFQ" means Request for Quote.

ARTICLE 2: TRADING TERMS

2.1 Trading Relationship

This Agreement establishes a framework for OTC trading between the parties. Each Trade shall be subject to:
- This Agreement
- The specific terms of the Trade Confirmation
- Applicable laws and regulations

2.2 Eligible Assets

The following assets may be traded under this Agreement:

Party A may add or remove eligible assets with notice.

2.3 Minimum Trade Size

2.4 Trading Hours

☐ 24/7 (subject to staff availability)
☐ [START TIME] - [END TIME] [TIMEZONE]
☐ Business days only

ARTICLE 3: TRADE EXECUTION

3.1 Quote Process

3.1.1 Client may request a quote via:
☐ Phone: [NUMBER]
☐ Secure messaging: [PLATFORM]
☐ Email: [EMAIL]
☐ Trading platform: [URL]

3.1.2 RFQ shall include:
- Asset pair
- Direction (buy/sell)
- Quantity or notional amount
- Settlement preference

3.1.3 Desk shall provide a quote including:
- Price
- Quote validity period
- Settlement terms

3.2 Quote Validity

Quotes are valid for:
☐ [NUMBER] seconds (indicative)
☐ [NUMBER] minutes (firm)
☐ Until withdrawn

3.3 Trade Acceptance

3.3.1 A Trade is executed when:
- Client accepts a firm quote within validity period
- Desk confirms acceptance

3.3.2 Acceptance methods:
☐ Verbal (recorded line)
☐ Written/electronic confirmation
☐ Platform click-to-trade

3.4 Trade Confirmation

3.4.1 Desk shall issue a Confirmation including:
- Trade reference number
- Trade Date and time
- Asset pair
- Direction (buy/sell)
- Quantity
- Price
- Settlement Date
- Settlement instructions

3.4.2 Client shall confirm accuracy within [NUMBER] hours. Failure to object constitutes acceptance.

3.5 Pricing

3.5.1 Prices are based on:
☐ Desk's proprietary pricing
☐ Reference to [EXCHANGE(S)]
☐ Index: [INDEX NAME]

3.5.2 Spreads are included in quoted prices.

ARTICLE 4: SETTLEMENT

4.1 Settlement Timing

4.2 Settlement Process

4.2.1 Cryptocurrency Settlement:

Delivering party shall transfer cryptocurrency to the receiving party's designated wallet:

• Party A Wallet: [ADDRESS]
• Party B Wallet: [ADDRESS]

Transfer deemed complete upon [NUMBER] blockchain confirmations.

4.2.2 Fiat Settlement:

Wire transfer to designated bank account:

Party A Bank Details:
- Bank: [BANK]
- Account: [NUMBER]
- Routing/SWIFT: [NUMBER]

Party B Bank Details:
- Bank: [BANK]
- Account: [NUMBER]
- Routing/SWIFT: [NUMBER]

4.3 Simultaneous Settlement

☐ DVP (Delivery vs. Payment): Assets exchanged simultaneously
☐ Sequential: [PARTY] delivers first; [PARTY] settles within [HOURS]
☐ Escrow: Third-party escrow for settlement

4.4 Settlement Failure

4.4.1 If a party fails to settle by Settlement Date:

• Non-defaulting party may terminate the Trade
• Defaulting party liable for:
• Replacement cost
• Market movements
• Interest at [X]% per day
• Costs and expenses

4.4.2 Desk may suspend trading privileges for settlement failures.

4.5 Netting

☐ Netting Available: Multiple Trades may be netted for settlement
☐ Gross Settlement: Each Trade settles individually

ARTICLE 5: CREDIT AND COLLATERAL

5.1 Credit Terms

☐ Pre-Funding Required: Party B must pre-fund before Trade execution

☐ Credit Line: Party B has unsecured credit line of $[AMOUNT]

☐ Collateralized Credit: Party B may trade up to [X]% of posted collateral

5.2 Collateral Requirements

If collateral is required:

Eligible Collateral:
| Asset | Haircut |
|-------|---------|
| USD (bank account) | 0% |
| USDC/USDT | [X]% |
| BTC | [X]% |
| ETH | [X]% |

Collateral Amount: $[AMOUNT] or [X]% of anticipated trading volume

5.3 Margin Calls

If collateral value falls below required levels:
- Desk notifies Client
- Client has [NUMBER] hours to post additional collateral
- Failure may result in position liquidation

ARTICLE 6: REPRESENTATIONS AND WARRANTIES

6.1 Mutual Representations

Each party represents and warrants that:

(a) It has authority to enter into this Agreement and execute Trades;
(b) This Agreement constitutes a valid and binding obligation;
(c) It is not subject to bankruptcy or insolvency proceedings;
(d) It is in compliance with applicable laws;
(e) It is not located in or transacting with sanctioned jurisdictions;
(f) It is not on any government sanctions list.

6.2 Party A (Desk) Representations

Party A represents and warrants that:

(a) It is registered with FinCEN as an MSB (if applicable);
(b) It maintains appropriate licenses for its activities;
(c) It implements AML/KYC compliance procedures;
(d) It has authority to quote and execute Trades.

6.3 Party B (Client) Representations

Party B represents and warrants that:

(a) It has conducted its own evaluation of trading risks;
(b) It is not relying on Party A for investment advice;
(c) All information provided in onboarding is accurate;
(d) Source of funds is legitimate;
(e) It meets eligibility requirements for OTC trading.

ARTICLE 7: COMPLIANCE

7.1 AML/KYC

7.1.1 Party B has completed KYC verification including:
☐ Identity verification
☐ Entity documentation (if applicable)
☐ Source of funds/wealth documentation
☐ Beneficial ownership information

7.1.2 Party B shall:
- Promptly update information if it changes
- Cooperate with enhanced due diligence requests
- Provide additional documentation as reasonably requested

7.2 Sanctions Compliance

7.2.1 Each party shall screen transactions for sanctions compliance.

7.2.2 Neither party shall execute Trades involving:
- Sanctioned individuals or entities
- Sanctioned jurisdictions
- Blocked wallet addresses

7.3 Suspicious Activity

Party A may:
- Decline or delay Trades if suspicious activity suspected
- File Suspicious Activity Reports as required
- Freeze funds if legally required

7.4 Tax Reporting

Party A may provide or be required to provide tax documentation including Form 1099-DA or similar.

ARTICLE 8: RISK DISCLOSURES

8.1 Market Risk

Party B acknowledges:
- Cryptocurrency prices are highly volatile
- Prices may move significantly between quote and settlement
- OTC quotes may differ from exchange prices
- Large trades may impact market prices

8.2 Settlement Risk

Party B acknowledges:
- Counterparty may fail to settle
- Blockchain transactions are irreversible
- Network congestion may delay settlement

8.3 Regulatory Risk

Party B acknowledges:
- Cryptocurrency regulations may change
- Regulatory actions may affect trading ability
- Tax treatment may change

8.4 Liquidity Risk

Party B acknowledges:
- Certain assets may have limited liquidity
- Desk may decline to quote certain assets or sizes
- Spreads may widen in volatile markets

ARTICLE 9: LIMITATION OF LIABILITY

9.1 Limitation

EXCEPT FOR GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR BREACH OF COMPLIANCE OBLIGATIONS:

(a) Neither party shall be liable for indirect, incidental, special, consequential, or punitive damages;

(b) Party A's total liability shall not exceed fees earned from Party B in the [12] months preceding the claim.

9.2 Exclusions

Party A is not liable for:
- Market movements
- Quote withdrawals before acceptance
- Execution delays due to market conditions
- Third-party system failures
- Regulatory actions

ARTICLE 10: INDEMNIFICATION

10.1 Party B Indemnification

Party B shall indemnify Party A against claims arising from:
- Party B's breach of representations or warranties
- Party B's violation of laws
- Tax liabilities related to Party B's Trades
- Third-party claims related to Party B's assets

10.2 Party A Indemnification

Party A shall indemnify Party B against claims arising from:
- Party A's gross negligence or willful misconduct
- Party A's breach of this Agreement

ARTICLE 11: EVENTS OF DEFAULT

11.1 Events of Default

The following constitute Events of Default:

(a) Failure to settle a Trade when due;
(b) Breach of representation or warranty;
(c) Failure to post required collateral;
(d) Insolvency, bankruptcy, or similar proceedings;
(e) Material adverse change in financial condition;
(f) Sanctions designation;
(g) Regulatory action that impairs ability to perform.

11.2 Remedies

Upon Event of Default, non-defaulting party may:
- Suspend trading
- Terminate all outstanding Trades
- Liquidate collateral
- Calculate and demand payment of termination amount
- Pursue any other available remedies

11.3 Close-Out Netting

Upon termination, all outstanding Trades shall be valued and netted to a single termination amount.

ARTICLE 12: TERM AND TERMINATION

12.1 Term

This Agreement is effective from the Agreement Date and continues until terminated.

12.2 Termination

Either party may terminate with [NUMBER] days written notice. Termination does not affect outstanding Trades.

12.3 Effect of Termination

Upon termination:
- No new Trades may be executed
- Outstanding Trades settle per their terms
- Collateral returned after all obligations satisfied

ARTICLE 13: CONFIDENTIALITY

13.1 Confidential Information

Each party shall maintain confidentiality of:
- Trade details
- Pricing information
- Business strategies
- Client information

13.2 Permitted Disclosures

Disclosure permitted to:
- Regulators and law enforcement
- Professional advisors
- As required by law

ARTICLE 14: GENERAL PROVISIONS

14.1 Governing Law

This Agreement shall be governed by the laws of [STATE/JURISDICTION].

14.2 Dispute Resolution

☐ Arbitration under [AAA/JAMS] rules in [LOCATION]
☐ Litigation in courts of [JURISDICTION]

14.3 Entire Agreement

This Agreement constitutes the entire agreement regarding OTC trading between the parties.

14.4 Amendments

Amendments must be in writing signed by both parties.

14.5 Assignment

Neither party may assign without consent.

14.6 Severability

Invalid provisions shall not affect remaining provisions.

14.7 Notices

Notices shall be sent to addresses above.

14.8 Recording

Parties consent to recording of communications related to Trades.

SIGNATURES

PARTY A (DESK):

Signature: _________________________________

Name: [NAME]

Title: [TITLE]

Date: [DATE]

PARTY B (CLIENT):

Signature: _________________________________

Name: [NAME]

Title: [TITLE]

Date: [DATE]

EXHIBIT A: TRADE CONFIRMATION TEMPLATE

TRADE CONFIRMATION

Confirmation:
Party B confirms accuracy of the above Trade details.

Signature: _________________ Date: _________

REGULATORY NOTICES

FinCEN NOTICE: OTC cryptocurrency trading may constitute money transmission requiring FinCEN MSB registration and state licensing. Party A represents that it maintains appropriate registrations.

SEC/CFTC NOTICE: Certain digital assets may be securities or commodities subject to SEC or CFTC jurisdiction. Trading may be subject to applicable regulations.

AML NOTICE: This Agreement is subject to anti-money laundering regulations. Suspicious transactions will be reported as required by law.

TAX NOTICE: OTC trades may be taxable events. Parties are responsible for their own tax compliance.

This template is provided for informational purposes only and should be reviewed and customized by qualified legal counsel familiar with OTC trading and cryptocurrency regulations.