Galaxy Digital Launches OTC Prediction Markets Desk for Institutional Investors

TLDR

• Galaxy Digital launched an OTC prediction markets trading desk for institutional investors, one of the first major digital asset firms to do so.
• The first trade was a $10 million event swap with crypto hedge fund Arca, tied to whether the CLARITY Act passes before 2027.
• The desk operates through Galaxy’s Global Markets unit and serves clients on Kalshi and Polymarket.
• Prediction markets cleared over $60 billion in volume in 2026, but large trades can still move prices on public order books.
• Galaxy’s research desk puts the CLARITY Act’s odds of passing at 75%, ahead of Kalshi and Polymarket’s current pricing of 50% to 73%.

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Galaxy Digital has moved into institutional prediction markets, launching an over-the-counter trading desk that lets hedge funds and family offices take positions on political and economic events at sizes that public platforms cannot easily handle.

How the Desk Works

The desk sits within Galaxy’s Global Markets unit. It focuses on non-sports event contracts listed on Kalshi and Polymarket.

Galaxy acts as a principal counterparty, meaning it quotes prices directly and holds the risk on its own book. This allows it to handle large trades without moving the public order book.

Clients can also pair prediction market positions with hedges in equities and commodities. That gives institutional investors a way to build broader, event-driven strategies around political and regulatory outcomes.

The firm said prediction markets cleared more than $60 billion in volume in 2026. But liquidity for large trades remains thin. A $10 million order on existing platforms could move prices before the trade is fully complete.

The First Trade: The CLARITY Act

Galaxy’s first transaction on the new desk was a $10 million event swap with crypto hedge fund Arca.

The trade is tied to the Digital Asset Market Clarity Act, which would create a regulatory framework for digital assets in the United States. Under the terms of the swap, Arca pays Galaxy if the bill becomes law before 2027. Galaxy pays Arca if it does not.

Jeff Dorman, Arca’s chief investment officer, said prediction markets are currently one of the best tools available to hedge exposure to the ongoing regulatory debate in Washington. He said Arca’s size made it difficult to participate directly on existing platforms due to limited liquidity.

Galaxy’s research team currently assigns a 75% probability to the CLARITY Act passing. The Senate Banking Committee advanced the bill 15-9 on May 14. Galaxy estimates a signing date around the week of August 3.

Kalshi and Polymarket traders have priced the same outcome between 50% and 73% over the past month.

Jason Urban, Galaxy’s global co-head of digital assets, said event-driven markets are becoming important tools for sophisticated investors expressing macro views, and that the desk gives clients a counterparty that can handle block-sized trades.

Prediction Markets Are Growing Fast

Combined monthly volume on Kalshi and Polymarket grew from under $5 billion in September 2025 to around $24 billion in April 2026.

Kalshi recently said its annualized institutional volume rose 800% over six months to $178 billion. The platform raised $1 billion at a $22 billion valuation last month.

Intercontinental Exchange, the parent of the New York Stock Exchange, is backing Polymarket with $2 billion in funding.

Other trading firms have entered the space. Jump Trading and Wintermute began formal activity earlier this year. Polymarket also completed its first block trade recently, in a transaction between broker FalconX and trading tech startup Anera Labs.

Galaxy Digital, GLXY

Galaxy shares were down 6% on Tuesday, in line with the broader crypto stock market.

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