Galaxy Digital, the Nasdaq-listed digital assets firm, has launched institutional OTC prediction markets trading through its Global Markets desk, marking one of the most significant institutional infrastructure builds in the prediction markets sector to date.
The offering, announced June 2, gives hedge funds, family offices, and other institutional clients access to prediction market liquidity at sizes and with a level of discretion that retail interfaces on Kalshi and Polymarket cannot accommodate. The launch trade—a $10 million position with crypto-native hedge fund Arca on the outcome of the CLARITY Act passage—signals the kind of macro-hedging use case Galaxy is targeting.
The $10M CLARITY Act Trade
The launch transaction is itself a noteworthy data point on how institutions are now treating prediction markets. Arca, a digital-asset-focused investment firm, executed a $10 million bilateral OTC trade with Galaxy, taking a precise position on the outcomes associated with the Digital Asset Market Clarity Act—the crypto market structure bill currently working through the U.S. Senate.
“Arca is currently investing in themes closely related to the negotiations in Washington over CLARITY,” said Jeff Dorman, Chief Investment Officer at Arca, in the announcement. “Hedging via prediction markets on CLARITY is one of the most appropriate vehicles currently, but prediction markets are currently not a sophisticated institutional market with enough liquidity for a fund of our size. By utilizing the OTC market with Galaxy, we were able to execute a trade that best suits our fund strategy.”
The trade arrives as the CLARITY Act enters a tight Senate window before the August recess. The bill cleared the Senate Banking Committee in a 15-9 vote on May 14, but a floor vote has not been scheduled, and the ethics provision dispute remains the central blocker to securing the 60 votes needed for passage. Galaxy Research itself currently puts the probability of CLARITY Act passage in 2026 at 75%, with a realistic signing date estimated for the week of August 3.
For Arca, the CLARITY Act outcome has direct portfolio implications, since the fund’s strategy is positioned around themes tied to U.S. crypto regulation. Hedging via a prediction market on the specific outcome — rather than trying to construct a synthetic hedge through correlated assets — gives the fund a direct exposure that pays out based on the actual binary event.
What Galaxy’s Desk Actually Offers
Galaxy’s prediction markets offering covers instruments referencing non-sports event contracts traded on Kalshi and Polymarket, spanning economic, political, geopolitical, and other event-driven markets. The firm has indicated plans to expand to additional platforms over time.
The more distinctive feature is the desk’s ability to pair prediction market positions with hedges in equities, commodities, and other asset classes. That cross-asset capability is something neither Kalshi nor Polymarket can offer directly through their retail interfaces, and it positions Galaxy as a venue where institutions can build complete risk strategies around a single event rather than managing exposure in silos.
“Event-driven markets are becoming core to how sophisticated investors express macro views, and they deserve institutional infrastructure to match,” said Jason Urban, Global Co-Head of Digital Assets at Galaxy. “We’re giving clients a principal counterparty that can warehouse risk, build hedged strategies across asset classes, and execute at sizes and scale that actually matter to their overall portfolios.”
Galaxy conducts the activity solely with institutional counterparties and evaluates offerings on a jurisdiction-by-jurisdiction basis, the firm said. Galaxy received its BitLicense from the New York State Department of Financial Services on May 18, giving it expanded regulatory clearance to operate in New York State.
A Rapidly Building Institutional Layer
The launch positions Galaxy alongside a growing list of major trading firms building institutional infrastructure around prediction markets.
Market maker Wintermute expanded into prediction market trading just four days earlier, with Jake Ostrovskis, Wintermute’s Head of OTC Trading, framing the opportunity directly: “Prediction markets have the demand profile of a major asset class but the liquidity profile of an early-stage one. For these markets to become a reliable real-time source of probability estimates, they need sustained two-sided liquidity.”
Galaxy’s entry as a principal counterparty addresses the same liquidity gap from a different angle — by warehousing risk on its own balance sheet rather than market-making across order books. The two approaches are complementary, and together they signal that prediction markets are crossing the threshold from retail-dominated trading venues into a sector with full institutional plumbing.
Galaxy itself acknowledged the broader market impact in its announcement, noting that as institutional capital flows into prediction markets through facilitators, “the prices on these platforms should become more reflective of professional analysis — and more useful as signals for investors, policymakers, and corporates watching the same outcomes.”
The Polymarket-Kalshi Volume Backdrop
The institutional buildout is happening as both platforms reach unprecedented scale. Polymarket processed over $62 billion in cumulative notional trading volume, including a record-setting $7 billion in February 2026 alone, and is currently seeking $400 million in fresh capital at a $15 billion valuation. Kalshi, the CFTC-regulated rival, is valued at approximately $22 billion.
Both platforms have been racing into adjacent product surfaces in 2026, with Kalshi launching Bitcoin perpetual futures and Polymarket pursuing its own derivatives play under the same regulatory tailwinds that brought the CFTC’s recent perps onshoring push.
The institutional access layer that Galaxy is now building sits on top of that retail platform competition. Hedge funds, family offices, and corporate treasuries gain access to the same event contracts, but at sizes and discretion levels and with cross-asset hedging capabilities that retail platforms structurally cannot offer.
Why It Matters
The Galaxy announcement is part of a broader shift in how prediction markets are perceived by serious capital. For most of the platforms’ history, retail traders, political bettors, and speculative crypto users dominated volume. The 2024 U.S. presidential election cycle brought prediction markets into the mainstream financial conversation, and the 2026 institutional buildout—Wintermute, Galaxy, and likely others to follow—is the structural consequence.
The pricing of CLARITY Act passage contracts on Kalshi and Polymarket now reflects not just retail sentiment but institutional positioning, with Galaxy as the principal counterparty warehousing the risk on behalf of clients building real macro strategies around the outcome.
If the bill passes, Arca’s hedge pays off. If it fails, the position offsets the broader portfolio damage from a regulatory disappointment. Either way, the trade demonstrates that prediction markets are now functioning as macro hedging instruments at the same scale as derivatives, equities, and commodities.
