Galaxy Digital launches OTC swap desk for prediction markets

Galaxy Digital has launched a swap dealer arm to give institutional clients bilateral access to event-driven contracts, a structure that bypasses public prediction exchanges entirely. The headline transaction is a $10 million OTC event swap between Galaxy and crypto hedge fund Arca, tied to the passage of a major U.S. crypto bill. That single trade is nearly five times larger than the comparable contract listed on Kalshi. Crypto finance conglomerate Galaxy Digital has launched a trading desk to offer large investors better access to prediction markets https://t.co/jEltvdimjT — Bloomberg (@business) June 2, 2026

Why Institutional Volume is Moving Off-Exchange

Kalshi's annualized volume recently tripled to $178 billion, yet liquidity on non-sports events remains shallow. Macro hedge funds and family offices that want meaningful exposure face a structural problem: order books on platforms like Kalshi and Polymarket aren't deep enough to absorb large trades without moving the price. OTC dealers can warehouse that risk. Privacy is a separate consideration. A block trade executed on a blockchain-based platform like Polymarket leaves a public record tied to a wallet address, which can expose a fund's positioning — a feature, one might note, mostly loved by journalists and onchain sleuths. Bilateral OTC execution carries no such disclosure risk. The third factor is legal infrastructure. ISDA Master Agreements let institutional clients book event risk within the frameworks they already use — same documentation, same counterparty relationships — rather than connecting to new and often offshore platforms. That reduces both operational and regulatory friction. "Prediction markets are currently not a sophisticated institutional market with enough liquidity for a fund of our size," said Jeff Dorman, CIO of Arca. "By utilizing the OTC market with Galaxy, we were able to execute a trade that best suits our fund strategy."

Institutional Infrastructure Around Prediction Markets

Galaxy's move sits within a broader shift in how intermediaries are positioning around prediction market growth. Wintermute has begun posting continuous two-sided liquidity on public prediction platforms to tighten spreads. Marex has packaged prediction market outcomes into principal-protected structured notes for high-net-worth clients. The Coalition for Prediction Markets, meanwhile, is lobbying in Washington to establish a federal regulatory framework for the sector. For larger investors, OTC dealers currently offer something prediction market exchanges often cannot: privacy, execution capacity, and familiar derivatives infrastructure.