Jurisdiction(s):
United Kingdom

Key definition

OTC definition

What does OTC mean? In legal and financial practice, OTC (over the counter) refers to transactions negotiated and executed bilaterally off‑exchange or off‑venue, most commonly in derivatives, bonds and structured products. It is a descriptive market term; however, “OTC derivative” is defined for regulatory purposes in UK EMIR and EU EMIR, which trigger obligations such as trade reporting to a trade repository, mandatory clearing (where applicable), risk‑mitigation techniques and margin for uncleared trades. OTC activity also engages MiFID II/MiFIR and UK/EU MAR requirements on conduct, transparency, conflicts and, where relevant, best execution. OTC contracts are typically documented under an ISDA Master Agreement with a Credit...

UK crypto derivatives: property treatment, collateral and insolvency, ISDA Digital Asset Definitions (valuation, forks), and regulation under FSMA/RAO and the 2025 Cryptoassets Order

Published by a LexisNexis Banking & Finance expert

Practice notes

What does this Practice Note cover?

This Practice Note outlines the key legal, regulatory and contractual considerations relevant to crypto derivatives in the UK, with particular emphasis on property treatment, collateralisation, standardisation through ISDA, and the UK regulatory framework. Its principal focus is on derivatives that reference native cryptoassets, such as Bitcoin and Ether. Traded on liquid, decentralised markets, these instruments display marked price volatility. These traits generate strong market incentives for trading and speculation, while also fuelling demand for hedging tools to manage price risk and facilitate price discovery. Together, these forces have driven the development of standardised derivatives markets built around these assets.

What are crypto derivatives?

Crypto derivatives are financial contracts whose value is derived from an underlying digital (or crypto) asset. In practice, most such products reference specific ‘cryptoassets’—for example, Bitcoin or Ether—though the same principles can extend to other digital representations of value used as underlying assets. The terms ‘digital asset’ and ‘cryptoasset’ are often used interchangeably. The term ‘digital asset’ is generally employed in a broad or colloquial sense to describe a wide range of digital ‘things’ that may carry value or represent rights. By contrast, regulators use the...

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Ciarán McGonagle

Ciarán McGonagle is an experience lawyer specialising in digital assets and smart contracts with deep financial market expertise. As Tokenovate’s Chief Legal & Product Officer, he drives the legal-first product vision while serving as in-house counsel. He previously was Assistant General Counsel at ISDA and held roles at Deutsche Bank and Morgan Stanley. A graduate of Queen’s University Belfast, trained at Allen & Overy, Ciarán has taught property law and worked in Senator Chuck Hagel's office. He co-authored a seminal whitepaper on smart derivatives contracts and was named one of the UK’s Hot 100 lawyers in 2025. ...

Web page updated on 22/05/2026

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