Galaxy Launches $75 Million Tokenized CLO on Avalanche to Fund Arch Lending

Galaxy Digital has issued a $75 million tokenized collateralized loan obligation (CLO) on the Avalanche blockchain, providing capital for its Arch Lending credit facility. The CLO is anchored by a $50 million investment from institutional protocol Grove.

The transaction is structured to scale up to $200 million as Arch originates more crypto-backed loans, according to Galaxy Digital. The CLO is intended to fund consumer loans overcollateralized with assets like bitcoin and ether.

Galaxy said the CLO's debt tranches were tokenized and issued on Avalanche by INX, with tokens expected to be listed on INX's ATS platform. The move allows for secondary trading access for qualified investors.

What Is the Structure of the Tokenized CLO?

The CLO's senior coupon is priced at SOFR +570 bps, with an initial maturity of December 2026. Galaxy stated that proceeds have already funded approximately $75 million in loans under the facility.

The tokenized CLO is a first-of-its-kind transaction, enabling institutional engagement in credit markets via blockchain technology.

How Was the Transaction Secured and Structured?

Anchorage Digital Bank serves as the bond trustee and custodian, ensuring secure management of the underlying assets. The Atlas Settlement Network facilitates real-time monitoring and onchain settlement.

Accountable, a data verification platform, provides a dashboard for continuous transparency into the loans' performance and collateralization.

What Is the Significance of This Move for Galaxy?

This transaction represents a significant step in Galaxy's broader expansion into blockchain-based financial services. Following the Bitcoin halving in April 2024, Galaxy has been shifting focus toward high-performance computing and blockchain infrastructure.

In October 2025, Galaxy secured a $460 million investment to develop an AI data center hub. The CLO is another step in leveraging blockchain for institutional-grade finance.

What Are the Implications for the Crypto Lending Sector?

By providing a stable, institutional source of capital, Galaxy's CLO supports Arch Lending's operations. This could reduce reliance on volatile retail deposits and increase lending sector stability.

Experts see the CLO as a potential blueprint for future tokenized structured products. The transaction is compliant with existing regulations and includes a nationally chartered custodian and a regulated securities platform.

The move aligns with growing institutional interest in blockchain for structured finance. Avalanche's fast finality and customizable subnet architecture make it suitable for large-scale financial instruments.

What Are Analysts Watching Next?

Analysts are observing the potential for secondary market trading of tokenized CLO tranches. If regulatory hurdles are overcome, these tokens could trade on digital exchanges.

Galaxy's continued expansion into blockchain-based infrastructure, including potential partnerships with prediction market platforms like Polymarket and Kalshi, could also shape its future growth.

The success of this CLO could encourage further institutional capital to enter the tokenized asset space, particularly in structured finance and lending.