Galaxy Digital Eyes Partnerships with Kalshi and Polymarket to Expand Market Liquidity
Mike Novogratz’s Galaxy Digital Inc. is in talks with prediction market platforms Kalshi Inc. and Polymarket to serve as a liquidity provider, signaling a major move by a traditionally crypto-focused firm into the growing event-contract space. Galaxy plans to act as a market maker, offering regular trades that could increase liquidity and attract institutional investors to these platforms.
The discussions come as prediction markets gain traction with retail users and draw interest from Wall Street. By providing a reliable counterparty for trades, Galaxy would aim to bridge the gap between crypto infrastructure and conventional financial markets.
Galaxy Digital’s Strategy for Institutional Liquidity in Prediction Markets
Galaxy’s proposed involvement focuses on combining its institutional-grade trading and custody infrastructure with Kalshi and Polymarket’s platforms. Kalshi, regulated by the CFTC, operates primarily in fiat currency, offering contracts tied to elections, economic indicators, and weather events. Polymarket, by contrast, runs on blockchain technology, using cryptocurrency settlements on the Polygon network.
The collaboration could create hybrid trading rails, allowing institutional players to participate in markets previously dominated by retail while maintaining on-chain efficiency. As reported by Bloomberg, Galaxy is already experimenting with small-scale market-making on prediction markets, but Mike Novogratz anticipates scaling up to provide broader liquidity.
Addressing Liquidity Gaps Through Structured Market-Making
Prediction markets rely on market makers to ensure trades can be executed efficiently. Both Kalshi and Polymarket run incentive programs to reward traders providing liquidity in targeted markets. Galaxy’s participation could standardize this process, offering a consistent balance sheet and institutional support.
These markets have processed significant activity, with combined trading volume approaching $45,000 in smaller-scale contracts over recent cycles. Institutional involvement could transform market depth and reliability, encouraging higher volumes and smoother trading.
How Galaxy Could Standardize Prediction Markets and Attract Large Investors
Involvement from firms like Galaxy would bring infrastructure and credibility to the platforms, making them more appealing to hedge funds, prop desks, and other large investors, and more liquidity would also mean less risk of stuck trades and better pricing.
The market could also potentially eventually cover more events, such as elections and economic data, and function more like a traditional exchange, because the combination of regulated custody with on-chain settlement also sets a model for hybrid finance, or traditional systems with decentralized rails.
Compliance and Operational Challenges for Hybrid Fiat-Crypto Trading
Kalshi operates under full CFTC oversight, while Polymarket continues to navigate US regulatory scrutiny of crypto-based markets. Any formal partnership will require careful compliance alignment, an area where Galaxy has prior experience with institutional crypto offerings.
If finalized, these collaborations could position Galaxy Digital as a gateway for institutional players in prediction markets, linking conventional finance with decentralized forecasting tools. The deals would mark a notable expansion for the firm while strengthening the infrastructure of these rapidly growing platforms.
