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. Bilateral OTC execution carries no such disclosure risk.
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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
