Galaxy Digital Launches OTC Prediction Market Service for Institutional Investors

Galaxy Digital has introduced an over-the-counter (OTC) derivatives trading service specifically for prediction markets, targeting institutional investors such as hedge funds and family offices. The service, operated through the company’s Global Markets division, aims to provide access to large-scale trades that are not feasible on standard retail platforms like Kalshi or Polymarket.

New Institutional Channel for Prediction Markets

The service covers a broad range of event-based contracts, including those tied to economic indicators, political outcomes, and geopolitical developments, in addition to sports-related events. By offering OTC trading, Galaxy Digital enables institutions to execute trades at a scale and with a level of customization that public order books cannot accommodate.

This move signals a growing convergence between traditional finance infrastructure and the emerging prediction market sector. Galaxy Digital’s existing client base includes some of the largest crypto-focused funds, giving the firm a ready-made audience for this new offering.

Risk Management and Cross-Asset Hedging

A key feature of the service is the ability to hedge prediction market positions using correlated assets such as stocks, commodities, and other derivatives. This allows institutional clients to construct comprehensive risk management strategies around a single event, rather than treating prediction market positions as isolated bets.

For example, a fund holding a position on a political outcome could offset risk by taking opposing positions in related equity or commodity markets. This cross-asset approach is a significant departure from the siloed trading typically seen on event-based platforms.

First Trade: $10 Million on the Clarity Act

Galaxy Digital has already completed its first institutional trade under the new service. The firm executed a $10 million transaction for crypto hedge fund Arca, tied to the outcome of the Clarity Act. While specific terms of the trade were not disclosed, the size of the transaction underscores the demand for larger-scale event-driven exposure among institutional players.

Why This Matters for the Broader Market

The launch represents a step toward legitimizing prediction markets as a mainstream asset class. Until now, institutional participation has been limited by platform capacity, regulatory uncertainty, and the lack of tailored risk management tools. Galaxy Digital’s OTC service addresses all three barriers, potentially opening the door for more significant capital inflows into event-based trading.

It also highlights the increasing overlap between digital asset firms and traditional financial services. Galaxy Digital, originally known for its cryptocurrency trading and investment banking, is now positioning itself as a bridge between crypto-native products and institutional-grade financial infrastructure.

Conclusion

Galaxy Digital’s entry into OTC prediction market derivatives marks a notable expansion of institutional access to event-based trading. By combining large-scale execution with cross-asset hedging capabilities, the firm is offering a service that goes beyond what retail-focused platforms provide. The initial $10 million trade with Arca suggests that demand from sophisticated investors is real, and this could accelerate the integration of prediction markets into broader portfolio strategies.

FAQs

Q1: What is an OTC prediction market service?
OTC, or over-the-counter, trading allows institutions to execute large, customized trades directly with a counterparty rather than on a public exchange. In this context, Galaxy Digital facilitates event-based derivative contracts for institutional clients at a scale not available on platforms like Polymarket.

Q2: Which types of events can be traded?
The service covers economic, political, geopolitical, and sports-related events. This includes outcomes such as election results, central bank decisions, regulatory changes, and major sporting events.

Q3: How does cross-asset hedging work in this context?
Clients can offset risk in prediction market positions by taking opposing positions in related assets like stocks, commodities, or other derivatives. For example, a bet on a political outcome could be hedged with positions in affected industry stocks or currency pairs.