A Bitcoin liquidity provider RFP (request for proposal) is a structured process in which a company sends the same detailed questions to several providers, scores the answers against agreed weights and selects one or more counterparties. It replaces informal conversations with evidence. The result is a provider panel the finance team can defend to its board, its auditors and itself.
When a formal RFP is worth it
Not every company needs a full RFP. A small, one-off purchase may justify a lighter process. A formal RFP makes sense when:
- The planned allocation is material to the balance sheet.
- The company expects recurring purchases or sales over several years.
- The board or audit committee has asked for a documented selection.
- The company is replacing or adding to an existing provider.
The selection criteria themselves are covered in how to choose a Bitcoin liquidity provider. This article covers how to run the process and what to ask.
The process, step by step
- Define requirements. Expected order sizes, frequency, currencies, settlement preferences, custody arrangements and reporting needs. Write these into a short brief so providers quote against the same scenario.
- Build a long list. Typically five to eight providers across different models: principal desks, agency brokers and providers attached to custodians.
- Issue an NDA and the RFP. Give a fixed deadline and a single point of contact for questions. Share any clarifications with all bidders.
- Score written responses. Use the weights agreed before the RFP was issued.
- Shortlist two to four. Hold structured meetings and request sample documents.
- Run a test. Where possible, a small live trade or a dry run of settlement into your custody.
- Decide and document. Record scores, reasons and conditions, then move to legal agreements and onboarding.
A weighted scoring model
Agree the weights before reading any responses. The weights below are an example; adjust them to your priorities.
| Area | Example weight | What a strong answer shows |
|---|---|---|
| Regulatory status and structure | 20% | Clear authorisation for the contracting entity |
| Financial standing | 10% | Audited accounts, transparent ownership |
| Settlement and counterparty risk | 20% | DvP or short, documented pre-funding windows |
| Pricing and liquidity | 20% | Firm quotes at your sizes; transparent costs |
| Reporting and execution quality | 15% | Benchmark-based execution reports |
| Compliance and operations | 15% | Strong KYC, Travel Rule handling, controls |
Score each area on a fixed scale, such as 1 to 5, with a written reason for each score. Two independent scorers reduce bias.
CFO tip: set a minimum score in the regulatory and settlement areas that a provider must reach regardless of its total. A very good price should never compensate for a weak answer on where your money sits.
Bitcoin liquidity provider RFP questions
The list below can be copied into an RFP document. Ask for answers in writing, with supporting documents where noted.
Entity and regulation
- Which legal entity would be our contracting counterparty, and where is it incorporated?
- Which licences, registrations or authorisations does that entity hold, and for which activities? Please provide references we can verify.
- Who are the ultimate beneficial owners?
- Please provide audited financial statements for the last two years.
- Has the entity or any group company been subject to regulatory action, material litigation or a significant security incident? Please describe.
Settlement and custody
- Which settlement models do you offer: pre-funding, delivery versus payment, post-trade credit? From what size?
- Under pre-funding, how long after cleared funds will Bitcoin be released, and is this written into the agreement?
- Is client cash and Bitcoin segregated from your own assets while a trade is pending? With whom is it held?
- Can you deliver directly to our nominated custodian or multisig address? How are addresses whitelisted and changed?
- What are your cut-off times by currency, and how do you handle trades agreed outside banking hours?
- What happens if either leg of a trade fails or is late? Who bears the price movement?
Pricing and liquidity
- Do you act as principal, agent or both? How is this disclosed per trade?
- For our stated order sizes, will you provide firm quotes? What is the typical validity window?
- Are all costs embedded in the quoted price, or are there separate fees? Please list every fee.
- Do you apply a "last look" or re-quote practice? Under what conditions?
- Can you execute worked orders (TWAP, VWAP) and negotiated block trades?
- How do you source liquidity for large orders, and how do you protect client order information?
Reporting
- Please provide a redacted sample trade confirmation and execution report.
- Which benchmarks do you report against, and with what timestamp precision?
- Can reports be delivered in a machine-readable format?
Compliance and operations
- Describe your KYC and KYB onboarding process and typical timeline.
- How do you meet FATF Travel Rule obligations on transfers to and from our custodian?
- What sanctions screening and blockchain analytics do you apply to incoming and outgoing transfers?
- Can we restrict authorised traders, set size limits and require dual approval on our account?
- Please describe your business continuity arrangements and how you communicate an outage during a live trade.
- Do you hold insurance relevant to client assets? Please summarise scope and exclusions.
Testing the answers
Written answers are claims. Before appointing a provider, test them.
- Verify licences directly on the relevant regulator's public register.
- Compare the sample execution report with what the provider promised in questions 18 to 20. See what a Bitcoin execution report should contain.
- Ask for a settlement walk-through with the operations team, not only the sales team.
- Run a small first trade and measure every step against the written commitments.
Fold the results into your counterparty due diligence file and re-run a lighter version annually.
Closing the RFP well
Tell unsuccessful providers promptly. A provider not appointed today may be the right second or third name later, and good relationships help when you need competing quotes. Record the final decision, scores and any conditions in a short paper for the board or treasury committee. Companies should take their own legal advice on the resulting trading and settlement agreements.
How The Bitcoin World helps
We design and run Bitcoin liquidity provider RFPs for corporates: drafting requirements, building the long list, scoring responses and testing settlement before appointment. Execution, custody and settlement are carried out by licensed third-party institutions. See our OTC liquidity and board advisory services.