Key Highlights
- Galaxy Digital unveiled an over-the-counter prediction markets trading desk targeting institutional clients, positioning itself among the first major crypto firms to offer such services.
- The inaugural transaction was a $10 million event-based swap with Arca, a crypto hedge fund, centered on the CLARITY Act’s passage timeline before 2027.
- Operating within Galaxy’s Global Markets division, the desk provides services for Kalshi and Polymarket participants.
- While prediction markets processed more than $60 billion in trading activity during 2026, substantial orders still create price impact on publicly available order books.
- Galaxy’s internal analysis estimates a 75% probability for CLARITY Act passage, exceeding the 50%-73% range reflected in current Kalshi and Polymarket pricing.
Galaxy Digital has entered the institutional prediction markets arena by introducing an over-the-counter trading platform designed for hedge funds and family offices seeking to establish positions on political and economic events at volumes that exceed the capacity of public platforms.
Platform Structure and Operations
The new trading desk operates as part of Galaxy’s Global Markets division, concentrating on non-sports event contracts available on Kalshi and Polymarket.
Galaxy functions as the principal counterparty in these transactions, providing direct price quotes while assuming risk on its internal balance sheet. This structure enables the processing of substantial trades without creating disruptions in publicly visible order books.
The platform also offers clients the ability to combine prediction market exposures with hedging instruments across equities and commodities markets. This feature enables institutional participants to construct comprehensive, event-oriented strategies centered on political developments and regulatory changes.
According to the firm, prediction markets generated over $60 billion in trading volume throughout 2026. However, liquidity for larger transactions remains constrained. An order worth $10 million on current platforms could trigger price movements before execution completes.
Inaugural Transaction: CLARITY Act Swap
The desk’s first executed trade involved a $10 million event swap agreement with Arca, a cryptocurrency-focused hedge fund.
The transaction references the Digital Asset Market Clarity Act, proposed legislation that would establish a comprehensive regulatory structure for digital assets across the United States. According to the swap agreement, Arca receives payment from Galaxy if the legislation becomes law prior to 2027, while Galaxy receives payment from Arca if passage fails to occur within that timeframe.
Jeff Dorman, serving as Arca’s chief investment officer, indicated that prediction markets currently represent among the most effective instruments for hedging against uncertainty surrounding Washington’s regulatory discussions. He noted that Arca’s scale created challenges for direct platform participation due to liquidity constraints.
Galaxy’s internal research division currently places the CLARITY Act’s passage probability at 75%. Following the Senate Banking Committee’s 15-9 advancement of the bill on May 14, Galaxy projects a potential signing timeline around the first week of August.
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 for digital assets, emphasized that event-driven markets are emerging as critical instruments for sophisticated investors articulating macro perspectives, with the desk providing clients access to a counterparty capable of facilitating block-sized transactions.
Rapid Market Expansion
Combined 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% across a six-month period, reaching $178 billion. The platform secured $1 billion in funding at a $22 billion valuation during the previous month.
Intercontinental Exchange, which owns the New York Stock Exchange, is supporting Polymarket with $2 billion in capital.
Additional trading firms have established presence in this sector. Jump Trading and Wintermute initiated formal operations earlier this year. Polymarket also executed its first block trade recently through a transaction involving broker FalconX and trading technology startup Anera Labs.
Galaxy shares declined 6% on Tuesday, tracking movements across the broader cryptocurrency stock sector.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
