Galaxy Digital enters prediction markets as Arca places $10M trade

Galaxy Digital has launched an institutional over-the-counter prediction-markets desk, opening the service with a $10 million event swap tied to the Digital Asset Market Clarity Act.

Galaxy said Tuesday that the desk operates within its Global Markets unit and serves institutional clients seeking exposure to non-sports event contracts on Kalshi and Polymarket without relying solely on public order books. The Nasdaq-listed digital assets firm said it will act as a principal counterparty, allowing it to quote large bilateral trades and hold the risk on its own book.

The first transaction involved crypto hedge fund Arca, which used the structure to take a position on whether the CLARITY Act passes before 2027. Under the event swap, Arca pays Galaxy Digital if the bill becomes law before that deadline, while Galaxy pays Arca if it does not.

Galaxy Digital targets block-size prediction market trades

According to Galaxy, the new desk is designed for trade sizes that current prediction-market order books cannot easily absorb. The firm said it can also pair event positions with hedges in equities and commodities, giving institutional clients a way to structure trades around political, regulatory, and macro events.

Prediction markets have cleared more than $60 billion in volume in 2026, according to Galaxy’s release. However, the firm said liquidity remains limited for larger tickets, where a $10 million order could affect pricing before execution is complete.

Jeff Dorman, Arca’s chief investment officer, said in the release that prediction markets currently offer one of the most suitable ways to hedge against CLARITY. He added that the market does not yet have enough institutional liquidity for a fund of Arca’s size.

CLARITY Act trade opens the desk

The inaugural swap is linked to Kalshi’s binary market on the Digital Asset Market Clarity Act, where “yes” shares trade between $0 and $1 based on the market’s implied probability of passage. Galaxy said the Senate Banking Committee advanced the bill in a 15-9 vote on May 14, moving it closer to a possible floor vote.

Galaxy’s research desk currently assigns a 75% probability to the bill’s passage and estimates a signing date during the week of August 3. The firm said 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. He said Galaxy Digital is offering clients a principal counterparty that can warehouse risk and execute at a meaningful size.

The move places Galaxy alongside other trading firms entering prediction markets this year. Jump Trading and Wintermute began formal activity in the sector earlier, with Wintermute streaming two-sided quotes last month.

Galaxy’s role differs from a market maker focused on tighter spreads. The firm said its desk is built to absorb block trades that are too large for on-exchange books.

Institutional interest builds around Kalshi and Polymarket

Kalshi and Polymarket have reported a rapid rise in activity. Combined monthly turnover on the two platforms grew from under $5 billion in September 2025 to about $24 billion in April, according to figures cited in Galaxy’s release.

Kalshi said last month that its annualized institutional volume rose 800% over six months to $178 billion, as it announced a $1 billion raise at a $22 billion valuation. Intercontinental Exchange, the parent company of the New York Stock Exchange, is also backing Polymarket with $2 billion in funding.