Galaxy Digital is expanding its prediction market business to institutional clients. The company disclosed that its global markets trading division has launched an over-the-counter prediction market trading service, offering bilateral trading of contracts related to political, economic, and geopolitical events to institutional investors such as hedge funds and family offices.
The first phase covers two platforms.
This business targets high-volume transaction needs beyond retail platforms. Galaxy stated that the initial phase will cover non-sports event contracts on Kalshi and Polymarket, and clients can also combine related positions with hedging transactions of assets such as stocks and commodities to build event-driven strategies.
The first deal bet on the CLARITY Act
The company disclosed that, coinciding with the business launch, Galaxy completed a $10 million transaction with crypto hedge fund Arca, targeting the outcome of the proposed CLARITY Act in the United States. This act aims to establish a regulatory framework for digital assets in the United States.
Arca's Chief Investment Officer, Jeff Dorman, stated that prediction markets can serve as a tool to hedge against the risks of crypto regulatory negotiations in Washington, but the liquidity and scalability of existing platforms often fall short of meeting the needs of large institutions to participate directly.
Prediction markets attract more institutions
The forecasting market has grown rapidly in the past two years, with real-world events such as elections, central bank decisions, and regulatory developments becoming new tools for investors to express their views. Galaxy's participation as the primary counterparty in this transaction means that it can absorb some of the risk itself and provide greater anonymity for large transactions, rather than relying entirely on exchange matching.
On the same day, Polymarket also completed its first major transaction, between crypto brokerage FalconX and trading technology company Anera Labs. This indicates that the prediction market is gradually shifting from being retail-dominated to attracting more professional trading institutions.
Additional information:The original text mentions that supporters believe institutional participation can help improve the liquidity and pricing efficiency of prediction markets, but regulatory uncertainty remains a major problem in this field.
