Galaxy Digital announced on Tuesday the launch of over-the-counter prediction markets tailored for institutional investors, marking a pivotal shift in how major digital asset firms access event-driven trading. The Nasdaq-listed entity deployed this service through its global markets trading desk, establishing a bilateral framework that permits hedge funds and family offices to execute contracts linked to political, economic, and geopolitical events. This infrastructure addresses a critical market inefficiency by providing liquidity and trade sizes that remain inaccessible on retail-focused platforms. Data compiled by Woofun AI indicates that shares of the company declined 6% on Tuesday, mirroring the broader downturn in the crypto stock market despite the strategic expansion. The initiative arrives as prediction markets gain significant traction among investors seeking to express views on real-world outcomes ranging from elections to central bank decisions. Platforms like Kalshi and Polymarket have witnessed rapid expansion over the past 2 years, prompting numerous crypto-native entities to enter the sector. Galaxy's initial offering encompasses non-sports event contracts traded on Kalshi and Polymarket, with a roadmap to expand into additional venues. The firm further enables clients to integrate prediction market positions with hedges across equities, commodities, and other asset classes, thereby constructing comprehensive event-driven investment strategies. As a cornerstone of this launch, Galaxy facilitated a $10 million trade with crypto-focused hedge fund Arca tied to the outcome of the proposed CLARITY Act, legislation aimed at establishing a regulatory framework for digital assets in the United States. Woofun AI notes that Jason Urban, Galaxy's global co-head of digital assets, emphasized that event-driven markets are becoming central to how sophisticated investors articulate macro views and require matching institutional infrastructure. Jeff Dorman, Arca's chief investment officer, highlighted that prediction markets offer an effective mechanism to hedge exposure to ongoing Washington negotiations regarding crypto regulation, though liquidity constraints on existing platforms previously hindered direct participation by large investors. This strategic move reflects the broader institutionalization of a sector historically dominated by retail traders. By acting as a principal counterparty, Galaxy can warehouse risk and facilitate larger transactions while offering greater discretion than exchange-based trading. Earlier in the day, Polymarket completed its first block trade between crypto broker FalconX and trading tech startup Anera Labs, signaling a parallel trend toward larger transaction sizes. Industry observers suggest that the entry of firms like Galaxy could deepen liquidity and enhance pricing efficiency by introducing professional capital into the space. Supporters argue that increased institutional participation will render market prices more reliable as indicators of future outcomes, while critics caution that regulatory uncertainty remains a primary challenge for the sector. The launch further expands Galaxy's derivatives and trading business, reinforcing its position as a bridge between traditional financial markets and emerging digital asset infrastructure.