In a landmark transaction for institutional cryptocurrency adoption, Galaxy Digital has successfully issued a $75 million tokenized collateralized loan obligation (CLO) on the Avalanche blockchain. This deal, reported by The Block, represents a sophisticated fusion of traditional structured finance with blockchain technology, setting a new benchmark for creating, managing, and trading large-scale debt instruments in the digital asset ecosystem.
The CLO structure pools corporate loans and issues new securities, or tranches, backed by the loan pool's cash flows. Galaxy Digital's execution on Avalanche tokenizes this entire structure, with each security tranche becoming a digital token. Ownership, payments, and compliance rules are embedded into smart contract code. The digital securities platform INX managed the tokenization, enabling near-instantaneous settlement and immutable proof of ownership. Anchorage Digital Bank, a federally chartered digital asset bank, serves as the asset custodian, providing institutional-grade security and compliance.
The proceeds are being channeled into providing loans to the cryptocurrency lending platform Arch. The facility includes a scale-up clause, allowing the total commitment to reach a maximum of $200 million. The transaction's structure—involving issuer Galaxy, tokenization agent INX, and custodian Anchorage—forms a robust institutional framework.
The choice of the Avalanche blockchain is critical due to its high throughput and sub-second finality provided by its Snowman consensus protocol, offering the speed and certainty required for a $75 million instrument. This deal follows a growing pattern of institutional activity on Avalanche in the tokenized real-world assets (RWA) sector.
Financial analysts view this as a potential paradigm shift, moving tokenization from proof-of-concept to production-grade financial utility. The efficiency gains are substantial, automating costly middle and back-office operations for payment waterfalls and reporting. While the tokenized tranches are currently private placements, their form makes future trading on regulated digital securities exchanges a more feasible possibility.
The transaction also provided a market boost for Galaxy Digital itself, with its stock (GLXY) closing up 5.11% at $28.19 following the announcement. An anchor allocation of about $50 million was provided by Grove, operating within the Sky ecosystem.
