Galaxy Digital completed the initial closing of a tokenized Collateralized Loan Obligation (CLO) worth $75 million on the Avalanche blockchain. The deal was anchored by a $50 million allocation from Grove and finances an uncommitted credit facility for Arch Lending, marking a calibrated push to move institutional private credit on-chain.
Galaxy structured and tokenized the offering through its Lending and Digital Infrastructure teams, with Galaxy Asset Management overseeing the CLO. Proceeds are being used to progressively purchase outstanding loans originated under an Arch Lending facility; as additional loans are added, the CLO can scale up to a stated limit of $200 million. Key operational and market roles were split among several firms to preserve institutional standards.
Other critical participants include INX, which issued and tokenized the debt tranches on Avalanche and is expected to list the tokens on its ATS platform; Anchorage Digital Bank, acting as bond trustee, qualified custodian and collateral agent through its Atlas Settlement Network; NAV Consulting providing fund administration; and Accountable supplying real‑time verification of on‑chain and off‑chain assets.
Avalanche’s Snowman consensus and EVM compatibility served as the technical backbone for tokenization and on‑chain settlement.
The benefits and limitations of Galaxy’s CLO
The transaction illustrates several value propositions for institutional credit on-chain: smart contracts automate reporting and cash‑flow logic, reducing operational frictions and shortening settlement cycles; continuous data feeds and an interactive dashboard from Accountable increase visibility into loan performance; and tokenized tranches, with planned listing on a regulated ATS, aim to improve secondary‑market access for qualified investors.
At the same time, the structure relies on overcollateralized consumer loans backed by Bitcoin and Ethereum, which introduces a layer of market risk tied to crypto volatility. Structural and operational risks remain: evolving regulation could change compliance requirements, smart contract vulnerabilities persist, and actual secondary liquidity will depend on market adoption of tokenized credit instruments.
Galaxy’s approach seeks to keep institutional guardrails intact while testing whether tokenization can lower costs and broaden access. The deal positions public blockchain infrastructure as an efficiency layer rather than a replacement for established trustees, custodians and regulated trading venues.
Investors are now turning their attention to the planned listing of the tokenized tranches on INX’s ATS and to whether Arch Lending’s origination pipeline will allow the CLO to scale toward the $200 million ceiling. The CLO’s December 2026 maturity will serve as a significant test of the model’s performance and the market’s appetite for institutional, on‑chain credit exposure.
