Galaxy Digital launches OTC prediction markets desk for institutions
In brief
- Galaxy Digital launched OTC prediction markets desk for institutional clients through Global Markets
- Service covers Kalshi and Polymarket contracts on political, economic, and geopolitical events
- Galaxy facilitated $10M trade with crypto hedge fund Arca on Digital Asset Market Clarity Act
- Desk combines prediction market positions with equities and commodities hedges for integrated risk strategies
Bridging Prediction Markets and Portfolio Risk
Galaxy facilitated a $10 million trade with crypto hedge fund Arca tied to the outcome of the Digital Asset Market Clarity Act of 2025, marking the desk's inaugural transaction. The service covers non-sports contracts on Kalshi and Polymarket, including political, economic, and geopolitical events, giving institutional clients a way to express macro views through event-driven instruments.
What sets Galaxy's offering apart is its integration across asset classes. Galaxy can combine prediction market positions with hedges in equities, commodities, and other instruments to create broader risk-management strategies. This approach addresses a structural gap: prediction markets often lack the liquidity and scale that large institutional portfolios require, but OTC intermediation from a principal counterparty can bridge that gap.
The Institutional Demand Signal
Galaxy says the launch reflects growing demand from sophisticated investors who increasingly use event-driven markets to express macro views and manage portfolio risk. Jeff Dorman, Chief Investment Officer at Arca, highlighted this friction in his statement: "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."
Jason Urban, Global Co-Head of Digital Assets at Galaxy, framed the desk's value proposition around scale and flexibility: "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."
Galaxy currently offers the service exclusively to institutional clients and evaluates participation based on applicable legal and regulatory requirements in each jurisdiction. The move positions the firm at the intersection of traditional risk management and event-driven crypto markets, a space that's likely to expand as prediction markets mature and regulatory clarity improves.
