Galaxy launches institutional prediction markets trading, executes $10 million Arca deal

Galaxy Digital has launched an institutional over-the-counter (OTC) prediction markets trading service and completed a $10 million trade tied to U.S. cryptocurrency legislation, as the digital asset firm seeks to bring greater liquidity and professional participation to the rapidly growing sector.

The new offering, operated through Galaxy's Global Markets trading desk, gives hedge funds, family offices and other institutional investors access to prediction market contracts linked to political, economic and geopolitical events. The service initially covers non-sports contracts traded on Kalshi and Polymarket.

Galaxy said clients can also pair prediction market positions with hedges across equities, commodities and other asset classes, allowing them to build broader event-driven investment strategies.

As part of the launch, Galaxy facilitated a $10 million trade with crypto-focused hedge fund Arca tied to the outcome of the proposed CLARITY Act, a bill that would establish a regulatory framework for digital assets in the United States. Galaxy acted as the principal counterparty in the transaction, providing institutional-scale liquidity and bilateral execution.

The company described itself as one of the first major digital asset firms to offer large-scale institutional access to prediction markets through a bilateral trading framework.

"Event-driven markets are becoming core to how sophisticated investors express macro views, and they deserve institutional infrastructure to match," Jason Urban, Global Co-Head of Digital Assets at Galaxy, said in a statement.

"We're giving clients a principal counterparty that can warehouse risk, build hedged strategies across asset classes, and execute at sizes and scale that actually matter to their overall portfolios," Urban added.

Prediction markets have gained popularity among investors seeking to express views on elections, central bank decisions and regulatory developments. 

Platforms such as Kalshi and Polymarket have seen growing activity, while firms across the digital asset sector have expanded their involvement in event-based trading.

"Arca is currently investing in themes closely related to the negotiations in Washington over CLARITY," said Jeff Dorman, Chief Investment Officer at Arca.

"Hedging via prediction markets on CLARITY is one of the most appropriate vehicles currently, but prediction markets are currently not a sophisticated institutional market with enough liquidity for a fund of our size. By utilizing the OTC market with Galaxy, we were able to execute a trade that best suits our fund strategy."

According to Galaxy, increased institutional participation could improve liquidity and pricing efficiency in prediction markets, making market prices more useful indicators for investors, policymakers and corporations monitoring potential outcomes. 

The launch follows Polymarket's completion of its first block trade involving crypto broker FalconX and trading technology startup Anera Labs, highlighting growing institutional interest in the sector.

Galaxy, which provides digital asset trading, asset management, staking and tokenization services, has expanded its derivatives and trading operations in recent years as it seeks to bridge traditional financial markets and digital asset infrastructure.

The company conducts prediction market trading solely with institutional counterparties and evaluates offerings on a jurisdiction-by-jurisdiction basis in accordance with applicable legal and regulatory requirements.