Galaxy Digital Debuts Institutional OTC Desk for Prediction Market Trading

Key Takeaways

• Galaxy Digital unveiled an institutional OTC trading desk for prediction markets, becoming among the first major digital asset companies to offer this service.
• The inaugural transaction was a $10 million event contract with Arca, a crypto hedge fund, centered on the CLARITY Act’s passage timeline before 2027.
• This new desk functions under Galaxy’s Global Markets division and provides services for positions on Kalshi and Polymarket.
• Despite prediction markets processing more than $60 billion in trading volume throughout 2026, substantial orders can still cause significant price movements on public exchanges.
• Galaxy’s internal research team estimates a 75% probability for the CLARITY Act’s passage, exceeding the 50% to 73% range currently reflected on Kalshi and Polymarket.

Galaxy Digital has entered the institutional prediction markets arena by unveiling an over-the-counter trading platform designed to accommodate hedge funds and family offices seeking to establish positions on political and economic events at scales that conventional public platforms struggle to support.

Operational Framework of the Trading Desk

The new trading operation is housed within Galaxy’s Global Markets division, concentrating on non-sports event contracts available through Kalshi and Polymarket.

Galaxy functions as the direct counterparty, providing price quotes independently and assuming risk on its balance sheet. This structure enables the firm to execute substantial transactions without causing disruptions to public order books.

Institutional clients can combine prediction market exposures with protective positions in stocks and commodities. This capability provides sophisticated investors with opportunities to construct comprehensive, event-based strategies around political developments and regulatory changes.

According to the company, prediction markets handled over $60 billion in aggregate volume during 2026. However, deep liquidity for institutional-sized transactions remains scarce. A $10 million position on current platforms could trigger adverse price movements before execution is finalized.

Inaugural Transaction: CLARITY Act Swap

The desk’s opening trade involved a $10 million event-based swap agreement with Arca, a cryptocurrency-focused hedge fund.

This transaction references the Digital Asset Market Clarity Act, proposed legislation that would establish a comprehensive regulatory structure for digital assets across the United States. The swap structure requires Arca to compensate Galaxy if the legislation achieves enactment before 2027. Conversely, Galaxy compensates Arca if the bill fails to pass within that timeframe.

Jeff Dorman, serving as Arca’s chief investment officer, noted that prediction markets currently represent one of the most effective instruments for hedging exposure to Washington’s evolving regulatory landscape. He emphasized that Arca’s trading size created obstacles for direct platform participation due to insufficient liquidity depth.

Galaxy’s internal research division currently calculates a 75% likelihood for the CLARITY Act’s successful passage. The Senate Banking Committee approved the legislation with a 15-9 vote on May 14. Galaxy projects a potential signing date during the week beginning August 3.

Market participants on Kalshi and Polymarket have valued the identical outcome within a 50% to 73% probability range throughout the previous month.

Jason Urban, Galaxy’s global co-head of digital assets, stated that event-based markets are emerging as critical instruments for sophisticated investors articulating macroeconomic perspectives, and that the desk provides clients with a counterparty capable of executing block-sized transactions.

Rapid Expansion in Prediction Market Activity

Total monthly trading volume across Kalshi and Polymarket expanded from below $5 billion in September 2025 to approximately $24 billion by April 2026.

Kalshi recently disclosed that its annualized institutional volume surged 800% over a six-month period, reaching $178 billion. The platform secured $1 billion in funding at a $22 billion valuation last month.

Intercontinental Exchange, which owns the New York Stock Exchange, is supporting Polymarket with $2 billion in capital.

Additional trading entities have joined the sector. Jump Trading and Wintermute initiated formal operations earlier this year. Polymarket also executed its first block transaction recently, involving broker FalconX and trading technology startup Anera Labs.

Galaxy Digital, GLXY

Galaxy shares declined 6% on Tuesday, consistent with the broader cryptocurrency equity sector.

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