Galaxy Digital opens OTC prediction markets desk, executes $10 million trade with Arca

Global digital asset 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 at a scale larger than retail traders. 

The new service, run through Galaxy’s global markets desk, covers non-sports event contracts listed on Kalshi and Polymarket, according to a company press release.

The Nasdaq-listed firm then completed a $10 million inaugural trade with crypto hedge fund Arca, tied to the fate of U.S. digital asset legislation.

Institutions want a piece of the prediction market pie

Prediction markets have grown rapidly over the past two years, but liquidity remains thin for individuals chasing higher gains with bigger capital. Bloomberg reported that Galaxy’s single OTC trade with Arca worth 10 million was almost five times the size of the total volume on a Kalshi-listed contract tracking the same crypto legislation. The difference between institutional capital and retail is simply astronomical.

Galaxy’s head of prediction markets, Gilbert Wasserman, told Bloomberg that privacy is a major 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’s knowledge.

However, Galaxy will structure these trades as event swaps under pre-existing ISDA agreements. This framework would allow institutions to trade prediction markets without setting up separate legal infrastructure or directly opening accounts on specific prediction market platforms.

CLARITY Act focus of Galaxy Arca $10m trade

The $10 million transaction between Galaxy and Arca revolves around the Digital Asset Market Clarity Act of 2025, and whether it will pass Congress before 2027. According to the contract, Arca would pay Galaxy if the bill passes. If it fails to pass, Galaxy pays Arca.

Jeff Dorman, Arca’s chief investment officer, mentioned that prediction markets are among the best tools for hedging exposure to the recent regulatory negotiations in crypto, but that liquidity on existing platforms makes direct participation difficult for larger funds.

“Event-driven markets are becoming core to how sophisticated investors express macro views, and they deserve institutional infrastructure to match,” Jason Urban, Galaxy’s global co-head of digital assets, said in the press statement.

Prediction market expansion

Galaxy Digital has also stated that it will allow the combination of prediction market positions with other types of hedges across multiple asset classes.

This would ensure a wider set of strategies rather than taking isolated bets. The firm also plans to expand beyond Kalshi and Polymarket to additional platforms over time.

The company will conduct business only with institutional firms and assess its offerings on a jurisdiction-by-jurisdiction basis, according to Yahoo Finance’s CryptoProwl report.

Shares of Galaxy Digital (NASDAQ: GLXY) fell 6% on Tuesday, tracking a broader decline across crypto-related stocks. The stock was trading at $29.06 per share as at the time of writing.