Galaxy Digital closes tokenized CLO

Executive Summary

• Galaxy Digital Inc. has successfully closed the initial closing of its debut tokenized Collateralized Loan Obligation (CLO), Galaxy CLO 2025-1, valued at $75 million.
• The transaction is tokenized on the Avalanche blockchain and represents Galaxy's first CLO issuance, aimed at supporting its lending activities and scaling loan originations.
• The CLO is financing an uncommitted credit facility provided to Arch Lending, a crypto lending platform backed by Galaxy Ventures, with proceeds used to purchase outstanding loans overcollateralized with digital assets like Bitcoin and Ethereum.

Key Details

• Transaction Structure: Galaxy CLO 2025-1, a new-issue collateralized loan obligation (CLO) tokenized on the Avalanche blockchain.
• Initial Closing Amount: Approximately $75 million.
• Anchor Investor: Grove (an institutional-grade credit infrastructure protocol within the Sky ecosystem, formerly MakerDAO) provided an approximately $50-million anchor allocation.
• Use of Proceeds: Financing an uncommitted credit facility provided to Arch Lending; proceeds are used to progressively purchase outstanding loans under the Arch credit facility.
• Scalability: The CLO may scale up to a $200-million limit as additional loans are originated under the credit facility.
• Debt Terms: Senior coupon of SOFR plus 570 basis points.
• Maturity: Initial maturity set for December 2026.
• Distribution Schedule: Distributions to be paid out monthly.
• Trading and Listing: Debt tranches tokenized by INX; tokens expected to be listed on INX's ATS platform (a subsidiary of Republic) for qualified investors.
• Key Partners and Roles:
  • Galaxy Asset Management: Issuing and managing the CLO.
  • Anchorage Digital Bank: Serves as bond trustee, qualified custodian, collateral agent, and administrative agent (leveraging Atlas settlement network for real-time collateral monitoring).
  • NAV Consulting Inc.: Providing fund administration services.
  • Accountable: Partnered for real-time data verification of on-chain and off-chain assets, providing transparency into loan performance and collateralization.
• Strategic Context: The transaction aims to bring private credit on-chain to unlock instant settlement, enhanced structural transparency, improved secondary-market liquidity, and greater collateral efficiency.

Notable Quotes

• "We are pleased to have leveraged Galaxy's diversified business model to execute this first-of-its-kind transaction... By uniting our strengths in debt capital markets, blockchain technology and asset management, we're opening a new avenue for institutional engagement in credit markets -- one that benefits from greater efficiency, transparency and expanded collateral flexibility through on-chain execution." — Chris Ferraro, President and Chief Investment Officer at Galaxy.
• "This transaction marks another meaningful step forward for on-chain credit, demonstrating how familiar securitization structures can be brought on chain without compromising institutional standards... we're excited to partner with Galaxy and Avalanche to help advance the convergence of traditional credit markets and blockchain-based infrastructure." — Sam Paderewski, Co-founder of Grove Labs.