Galaxy launches prediction market OTC desk with $10M Arca trade

Galaxy Digital launched an institutional OTC prediction markets desk, executing a $10 million swap with hedge fund Arca on the Kalshi platform.

"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.

The desk offers bilateral event swaps referencing non-sports contracts on Kalshi and Polymarket, covering economic, political and geopolitical outcomes. Galaxy can pair these positions with hedges in equities and commodities, the company said. The initial $10 million trade with Arca centered on whether the Digital Asset Market Clarity Act of 2025 will pass Congress.

Galaxy's entry as a principal counterparty could push more institutional capital into prediction markets, potentially making prices on platforms such as Kalshi more reflective of professional analysis. The firm plans to expand the offering to additional platforms.

Arca used the OTC structure to take a precise position on the CLARITY Act at institutional scale, bypassing the liquidity constraints of retail prediction market interfaces. "By utilizing the OTC market with Galaxy, we were able to execute a trade that best suits our fund strategy," Jeff Dorman, Chief Investment Officer at Arca, said.

Galaxy conducts the activity solely with institutional counterparties and evaluates offerings on a jurisdiction-by-jurisdiction basis, the company said. The move positions Galaxy among the first crypto finance firms to bridge prediction markets — dominated by retail traders on platforms like Kalshi and Polymarket — with the derivatives infrastructure used in traditional markets.

Competitors including FalconX and Cumberland may face pressure to offer similar OTC services as institutional demand for event-driven exposure grows. Galaxy's stock rose 0.56% to $30.30 on the Nasdaq following the announcement.

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