Galaxy Launches Tokenized CLO on Avalanche, Secures Grove's $50 Million Allocation

Galaxy Digital Inc. has successfully closed a $75 million tokenized Collateralized Loan Obligation (CLO) on the Avalanche blockchain. The CLO is structured to finance Arch Lending's credit facility for crypto-backed consumer loans and is anchored by a $50 million investment from Grove. The transaction is Galaxy's first CLO issuance and represents a new model for institutional participation in onchain credit markets.

The CLO is designed to scale up to a $200 million limit, with proceeds being used to progressively purchase outstanding loans under the Arch credit facility.

This financing supports consumer loans that are overcollateralized with Bitcoin, Ethereum, and other digital assets.

Grove's $50 million allocation serves as the anchor tranche for the CLO and marks the latest deployment of tokenized real-world assets (RWAs) on Avalanche. Grove, part of the Sky ecosystem, has previously allocated $250 million into tokenized RWAs on the network.

Why Did This Happen?

The tokenized CLO represents a strategic move to expand Galaxy's lending and asset management capabilities through the debt capital markets. The structure enables scaling loan originations using a familiar institutional framework while offering investors access to innovative credit products.

By leveraging Avalanche's blockchain, Galaxy introduces greater efficiency, transparency, and collateral flexibility through onchain execution. The tokenization of the CLO supports instant settlement, improved secondary-market liquidity, and enhanced collateral efficiency.

How Did Markets Respond?

The issuance follows a broader trend of institutional investment in tokenized RWAs. Avalanche has become a key platform for institutional credit products, including structured credit and treasury instruments.

Galaxy's CLO also reflects growing interest in crypto-backed credit from institutional investors. The Arch Lending facility's focus on overcollateralized loans aligns with risk-averse strategies in the crypto lending space.

What Are Analysts Watching Next?

Analysts are closely monitoring how tokenized CLOs perform in secondary markets and whether they can offer competitive returns relative to traditional credit instruments. The structure also raises questions about regulatory acceptance and the scalability of tokenized securitization products.

Investors are also watching the performance of the underlying loans and the collateralization ratios. The real-time monitoring capabilities provided by Galaxy and Accountable offer a new level of transparency that could enhance investor confidence.

The CLO's initial maturity is set for December 2026, with monthly distributions expected. The senior coupon is priced at SOFR +570 basis points.

Anchorage Digital Bank serves as the bond trustee and custodian, while INX is responsible for issuing and listing the tokenized debt tranches on its ATS platform.

This move positions Galaxy as a key player in the convergence of traditional credit markets and blockchain infrastructure, supporting its broader strategy to expand institutional engagement in crypto-based finance.