Galaxy Digital has launched an over-the-counter prediction markets desk for institutional investors, executing a $10 million inaugural trade with hedge fund Arca. The trade is a bet on the passage of the U.S. CLARITY Act, a key piece of crypto legislation. The move reflects a broader institutionalization of the sector, addressing liquidity and privacy issues on retail platforms like Polymarket and Kalshi and attracting other major firms like Wintermute and BitGo.
Galaxy institutional OTC desk
- ▪Galaxy Digital has launched an over-the-counter (OTC) prediction markets trading desk for institutional investors
- ▪Galaxy Digital's service allows clients to combine prediction market positions with hedges in equities and commodities
- ▪Galaxy Digital will act as a principal counterparty, warehousing risk and structuring trades as event swaps under ISDA agreements
Arca CLARITY Act hedge
- ▪Galaxy Digital's inaugural transaction was a $10 million trade with crypto hedge fund Arca
- ▪Jeff Dorman noted that insufficient liquidity on existing retail platforms makes direct participation difficult for large funds
- ▪The trade is a bet on whether the U.S. Digital Asset Market Clarity Act will be passed into law before 2027
- ▪Under the contract terms, Arca pays Galaxy Digital if the Clarity Act passes, and Galaxy pays Arca if it fails
- ▪Arca's CIO Jeff Dorman stated that prediction markets are an appropriate vehicle for hedging exposure to U.S. crypto regulation
Institutional infrastructure buildout
- ▪On June 2, 2026, Polymarket completed its first block trade between crypto broker FalconX and Anera Labs
- ▪Other firms building institutional prediction market infrastructure include Wintermute, BitGo, and Jump Trading
Polymarket volume and valuation
- ▪In February 2026, Polymarket recorded $7 billion in trading volume
- ▪Polymarket is reportedly seeking to raise $400 million in capital at a $15 billion valuation
- ▪Polymarket has processed over $62 billion in cumulative notional trading volume
Kalshi platform growth
- ▪The $10 million Galaxy-Arca trade was nearly five times the total volume of a similar contract on Kalshi
- ▪Kalshi is a CFTC-regulated prediction market platform valued at approximately $22 billion
CLARITY Act Senate outlook
- ▪A key provision of the Clarity Act would prohibit the Federal Reserve from issuing a retail CBDC without explicit Congressional approval
- ▪Galaxy Research estimates a 75% probability that the CLARITY Act will pass in 2026
- ▪The bill requires 60 votes to pass the Senate, meaning it needs support from at least seven Democrats or independents
- ▪The Digital Asset Clarity Act aims to establish a U.S. regulatory framework for digital assets
- ▪The Clarity Act passed the House of Representatives in July 2025 and cleared the Senate Banking Committee in May 2026 on a 15-9 vote
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