Global digital assets and AI infrastructure firm Galaxy Digital has launched a new OTC (over-the-counter) prediction markets trading desk, which is expected to give institutional investors a platform to place bets on prediction events on a larger scale than retail traders.
The new service, which is operated through Galaxy’s global markets desk, covers non-sporting event contracts listed on Kalshi and Polymarket, according to a company press release.
The Nasdaq-listed company subsequently completed an inaugural $10 million deal with cryptocurrency hedge fund Arca, linked to the fate of US digital assets legislation.
Institutions want a share of the prediction market pie
Prediction markets have grown rapidly over the past couple of years, but liquidity remains poor for individuals seeking higher gains with more capital. Bloomberg reported that Galaxy’s sole over-the-counter trade with Arca worth $10 million was roughly five times the size of the total volume of a Kalshi-listed contract that tracks the same cryptocurrency legislation. The difference between institutional capital and retail capital is simply astronomical.
Gilbert Wasserman, head of prediction markets at Galaxy, told Bloomberg that privacy is a key attraction for these institutional investors.
Trades and bets placed on platforms like Polymarket can expose wallet addresses, making it difficult for institutional players to take positions without the public knowing.
However, Galaxy will structure these trades as event swaps under pre-existing ISDA agreements. This framework will allow institutions to trade in prediction markets without creating a separate legal infrastructure or opening direct accounts on specific prediction market platforms.
CLARITY LAW focuses on the $10 million Galaxy Arca trade
The $10 million deal between Galaxy and Arca revolves around the Digital Asset Market Clarity Act of 2025, and whether it will be passed by Congress before 2027. According to the contract, Arca will pay Galaxy if the bill is approved. If it fails to pass, Galaxy pays Arca.
Prediction markets are among the best tools to hedge exposure to recent regulatory negotiations in the cryptocurrency space, but liquidity on existing platforms makes direct participation difficult for larger funds, said Jeff Dorman, chief investment officer at Arca.
“Event-driven markets have become core to how sophisticated investors express their macro views, and they deserve the institutional infrastructure to match them,” Jason Urban, global co-head of digital assets at Galaxy, said in a press conference. press release.
Predicting market expansion
Galaxy Digital also stated that it will allow predictive market positions to be combined with other types of hedges across multiple asset classes.
This would ensure a wider range of strategies rather than making isolated bets. The company also plans to expand beyond Kalshi and Polymarket to additional platforms over time.
The company will only do business with institutional companies and will evaluate its offerings on a jurisdiction-by-jurisdiction basis, according to a CryptoProwl report by Yahoo Finance.
Shares of Galaxy Digital (NASDAQ: GLXY) fell 6% on Tuesday, tracking the broader decline across cryptocurrency-related stocks. The stock was trading at $29.06 per share at the time of writing.
