Galaxy Digital has introduced a new over-the-counter desk for institutional prediction markets, starting with a $10 million event-based swap involving the hedge fund Arca. This desk, housed within Galaxy’s Global Markets division, allows institutional clients to trade non-sports event contracts on platforms like Kalshi and Polymarket without relying on public order books. By acting as a principal counterparty, Galaxy can offer large bilateral trades and assume the risk itself.
The first trade centers on the Digital Asset Market Clarity Act, where Arca effectively bets on whether the bill will pass before 2027. Under the agreement, Arca pays Galaxy if the act becomes law before that date, while Galaxy pays Arca if it does not. This structure provides a tailored way for funds to hedge regulatory outcomes.
Galaxy designed the desk for trade sizes that typical prediction markets cannot handle efficiently; a $10 million order could shift pricing before completion. The firm can also combine event positions with hedges in stocks and commodities, enabling complex strategies around political and economic events. Prediction markets saw over $60 billion in volume in 2026, but liquidity for large trades remains scarce.
Jeff Dorman, Arca’s chief investment officer, noted that prediction markets offer a unique hedge for CLARITY Act exposure but lack sufficient institutional liquidity for sizable funds. Galaxy’s desk aims to fill this gap by absorbing block trades. The bill advanced in the Senate Banking Committee with a 15-9 vote on May 14, and Galaxy’s research team assigns a 75% probability of passage, potentially in early August. In contrast, Kalshi and Polymarket have priced the odds between 50% and 73% over the past month.
Jason Urban, Galaxy’s global co-head of digital assets, emphasized that event-driven markets are becoming essential for sophisticated investors expressing macro views. By warehousing risk, Galaxy provides a service distinct from market makers focused on spreads. Other trading firms like Jump Trading and Wintermute have also entered the prediction market space, but Galaxy’s role is to handle oversized trades.
Kalshi and Polymarket have seen explosive growth, with combined monthly turnover rising from under $5 billion in September 2025 to about $24 billion in April 2026. Kalshi’s institutional volume surged 800% to $178 billion annually. The Intercontinental Exchange, parent of the New York Stock Exchange, is also backing Polymarket with $2 billion, signaling strong institutional interest.