jakiro
Author: Zhang Feng
In the wave of crypto assets moving from the edge to the mainstream, Galaxy Digital has gradually grown into an important bridge connecting the world of traditional finance and digital assets.The company, founded by former Goldman Sachs partner Michael Novogratz, has a unique position in the field of crypto asset management with its unique “Wall Street Gene” and full-stack service model.This article will deeply analyze Galaxy Digital’s basic crypto asset management model from multiple angles.
1. The cryptographic evolution of traditional financial genes on Wall Street
The establishment of Galaxy Digital is not accidental, but a strategic layout of traditional financial elites’ deep understanding of blockchain technology.Founder Michael Novogratz, a typical representative of “Made in Wall Street”, worked at Goldman Sachs for 11 years and became a fixed income partner, and then joined Fortress Investment Group to lead macro-strategic investment.This experience allowed him to accumulate unique experience across macro trading, asset portfolio and national policies, and also laid a solid foundation for him to build a crypto-financial empire in the future.
After retiring from the traditional investment field in 2015, Novogratz began to carefully examine Bitcoin and the financial logic behind it.He keenly discovered a systematic gap – “the liquidity in the crypto world is getting deeper and deeper, but without structure.”The complete chains of asset management, market maker, clearing, ETF custody and other aspects that exist in traditional finance have almost no benchmarking in the crypto world.This is exactly the “institutional wasteland” that Galaxy Digital wants to fill.
In 2018, Novogratz invested $350 million out of his own pocket and successfully went public through a backdoor acquisition of Canadian shell company Bradmer Pharmaceuticals, creating the first crypto financial platform to provide full-stack services to institutions.The company has been designed as a “Wall Street version of on-chain investment bank”, with its service list benchmarking against Goldman Sachs, its transaction structure benchmarking against Citadel, and its compliance path benchmarking against Deloitte and Ernst & Young.
After nearly four years of hard work, Galaxy Digital finally completed its leap from the Canadian Exchange to the Nasdaq in May 2025, bringing unprecedented institutional credibility to crypto asset management.This transformation occurred after the revision of FASB accounting standards, where companies can include crypto assets in their financial reports at “fair value”, completely opening up the channel for “coin holding compliance”.
2. One-stop crypto financial service platform
Galaxy Digital’s core strategy is to build a one-stop institutional platform covering the entire life cycle of crypto assets, providing institutional clients and high-net-worth individuals with the same professional level as the traditional financial world.This strategic positioning stems from Novogratz’s insight into the core pain points of the crypto industry – institutional investors need not only investment channels, but also a complete set of financial infrastructure such as compliance, custody, and risk control.
(1) Three core business segments
Galaxy Digital’s business architecture mainly revolves around three core sectors:
Global Marketing Sector: Covering transactions and investment banking business, providing liquidity solutions to institutions.In the second quarter of 2025, the department-managed institutional loan accounts rose 27% to $1.1 billion, showing strong demand for its credit products.
Asset Management Business: Design crypto asset investment products for customers with different needs.As of the first half of 2025, its asset management scale reached nearly US$9 billion.
Digital Infrastructure Solutions: Including mining, staking agreement support and self-hosting technology.At present, Galaxy’s pledged assets have reached US$3.15 billion.
(II) Full value chain integration model
Galaxy Digital’s value chain construction path reflects its strategic thinking:In the upstream (asset generation/acquisition) stage, the company acquires assets through Bitcoin mining, venture capital and market making business; in the midstream (infrastructure and service) stage, it provides centralized trading, over-the-counter trading, institutional-level custody and other services; in the downstream (investment management/exit) stage, it provides active and passive crypto asset funds and wealth management services.
This full-industry chain layout allows Galaxy to capture the value of crypto assets from generation to circulation, and also provides customers with a seamless connection experience.For example, when a listed company decides to allocate crypto assets, Galaxy can not only provide OTC position building services, but also be responsible for asset custody, compliance disclosure and even pledge income optimization, forming a complete service closed loop.
3. From Bitcoin to multi-digital crypto asset ecosystem
In terms of asset selection, Galaxy Digital has adopted a gradual diversification strategy, gradually expanding from the early days of Bitcoin-based to covering the entire crypto ecosystem.
In the early days, Galaxy mainly followed Michael Saylor’s Bitcoin-based model, which is consistent with Novogratz’s recognition of Bitcoin’s “digital gold” attribute.But as the industry develops, Galaxy has gradually included Ethereum, Solana and other niche cryptocurrencies in its asset allocation scope.
This diversification strategy is particularly evident among the “crypto-treasury” customers of Galaxy services.For example, Galaxy signed an asset management agreement with SharpLink Gaming to manage its Ethereum vault.At the same time, Galaxy itself also holds a large amount of Bitcoin and Ethereum. As of the second quarter of 2025, it had US$1.27 billion in digital assets on its balance sheet, mainly BTC and ETH.
Galaxy also demonstrates a keen sense of layout in innovative asset categories.The company actively promotes the application of Solana spot ETFs and participates in investment in emerging asset categories such as Memecoin and LSD.This reflects Galaxy’s strategy of balancing mainstream and innovation in asset selection – not only ensuring the stability of the basic market through mainstream assets, but also capturing cutting-edge opportunities in the industry through moderate allocation of innovative assets.
4. Institutional-level technology and operational architecture model
One of Galaxy Digital’s core advantages in crypto asset management is its institutional-level technology platform and professional operational architecture.The company mainly provides services to two types of corporate treasury participants:For self-managed enterprises, Galaxy provides an institutional-level technology platform that enables them to conduct transactions, lending and pledge operations on their own; for enterprises seeking custodial management, they can obtain comprehensive management strategy and infrastructure support through Galaxy Asset Management.
Technical system: Self-developed trading and risk control platform.Galaxy has developed its own trading system to support self-operation and serve customers.This system is regarded as the company’s core competitiveness.Compared with the trading systems of traditional financial institutions, Galaxy’s self-developed system is not only cheaper, but also more suitable for the trading characteristics of digital currencies.
The platform integrates multiple modules such as price discovery, quotation system, and hosting services, and can be connected with customers’ digital asset wallets to form a complete transaction closed loop.By 2025, Galaxy has more than 150 institutional counterparties and is constantly expanding this network.
OTC transactions and large-value asset processing capabilities.Galaxy Digital demonstrates outstanding capabilities in the OTC trading space, especially when handling large transactions, which minimizes market shocks.In July 2025, Galaxy successfully processed the delivery of 80,000 Bitcoins (valued at approximately US$9 billion), which did not cause significant market fluctuations, fully demonstrating its transaction execution capabilities.
This capability stems from Galaxy’s strong liquidity network and extensive trading experience.The company can not only provide bulk matching and risk hedging services, but also avoid panic selling in the market through its dark pool trading system.For institutional customers, this low-impact trading ability is extremely valuable and is also the core advantage that distinguishes Galaxy from ordinary exchanges.
5. Comprehensive structure of multiple sources of income
Galaxy Digital has built a stable revenue structure through a diversified profit model, reducing its dependence on a single business.Its profit sources mainly include the following parts:
Management fee income.Galaxy charges asset management fees from partner companies to provide them with ongoing recurring revenue.According to SEC documents, for example, in the agreement with SharpLink, Galaxy charges tiered asset management fees ranging from 0.25% to 1.25% per year, with a minimum annual rate of $1.25 million.Currently, Galaxy has partnered with more than 20 crypto asset investment companies to manage approximately $2 billion in assets, creating “continuous recurring revenue.”
Trading and market making income.Although the transaction business is the main revenue entity of Galaxy (contributing about 99% of the company’s total revenue in 2024), the profit margin is extremely low, only 0.15%.This business is more of a drainage port and creates opportunities for the company’s other high-profit businesses.
Strategic return on investment.Galaxy makes strategic investments to earn returns through its asset division.In the second quarter of 2025, the division generated $198 million in revenue.Unlike Michael Saylor’s strategy of “buy only but not sell”, Galaxy will sell assets at strategic timing to achieve real profits.
Table: Analysis of Galaxy Digital’s main revenue sources for the second quarter of 2025
Income from emerging businesses.As the business expands, Galaxy is developing new revenue streams from the AI infrastructure sector.The 15-year contract signed by the company and CoreWeave is expected to achieve an average annual revenue of more than US$1 billion in three stages starting from the first half of 2026, with a profit margin of 90%.This high-margin long-term contract will provide Galaxy with more stable cash flow.
6. Risk management combining traditional financial risk control and encryption innovation
As a bridge connecting the traditional finance and the crypto world, Galaxy Digital has established a risk management framework that integrates traditional financial risk control experience and the characteristics of the crypto industry.
Market risk management.Galaxy manages market risks through diversified trading strategies.The company adopts diversified, multi-directional and multi-product trading methods to decouple its revenue from the price trend of digital currency to a certain extent.Even during the market downturn, you can obtain income through market making, lending and other businesses.
For the assets it manages, Galaxy adopts an active risk management strategy, including setting risk limits, regular stress testing, and dynamic position adjustments.This active management style is in sharp contrast to the “buy and hold” strategy of many crypto-native institutions.
Liquidity risk management.Galaxy attaches great importance to liquidity risks and maintains large amounts of cash and stablecoin reserves.As of the first quarter of 2025, the company held $1.1 billion in cash and stablecoins, as well as $1.9 billion in equity reserves.This provides sufficient buffer space for it when the market fluctuates violently.
Counterparty risk control.Galaxy implements strict standards when it comes to counterparty selection.The company requires all counterparties and clients to pass six process reviews and strictly abide by anti-money laundering regulations.As of 2021, Galaxy has more than 150 counterparties, and this network is still expanding.
7. Build a compliance foundation for institutional-level trust
Compliance is the core advantage that distinguishes Galaxy Digital from many crypto-native companies, and it is also the key to attracting institutional customers.
Take the initiative to embrace supervision.Galaxy adopts a strategy of proactively embracing regulation rather than trying to circumvent it like many crypto companies do.The company completed its reorganization from the Cayman Islands to the United States in the United States and was officially listed on the Nasdaq.This process, while undergoing nine rounds of feedback from the SEC and more than $25 million in compliance, brought institutional credibility to Galaxy.
Board-level policy impact capability.Galaxy has built a strong policy network at the board level, giving it an extremely rare “policy impact capability” among crypto companies.The board members include Tyler Williams, who was former deputy assistant secretary of the U.S. Treasury, and Doug Deason, an influential Texas real estate and energy lobbyist.These personnel arrangements provide an important bridge for Galaxy to communicate with regulators.
Compliance solutions innovation.Galaxy has developed a complete compliance solution for financial reporting challenges facing enterprises to allocate crypto assets.The company helps customers solve asset accounting issues under FASB accounting standards, so that crypto assets can be legally included in financial reports.This “compliant power-up” service has become an important magic weapon for Galaxy to attract corporate customers.
8. Strategic transformation to AI infrastructure
Faced with the cyclical characteristics of the encryption industry, Galaxy Digital is actively promoting a strategic transformation to AI infrastructure to achieve optimization of business structure and improvement of revenue stability.
In 2025, Galaxy announced that it had signed a 15-year main lease with AI supercomputing service provider CoreWeave, covering the 800 megawatts of total power currently approved by its Helios data center.This cooperation is expected to bring about $720 million in annualized recurring revenue streams and 90% EBITDA margins.
Galaxy has a potential capacity of 3.5 GW in Texas’ Helios campus, giving it a good spot in the market for supply-constrained AI infrastructure.If successful, this transformation will help Galaxy achieve its transformation from a cyclical crypto trading company to a stable infrastructure operator.
Galaxy Digital’s crypto asset management model is essentially a practice of structuralist philosophy – it does not develop independently outside the existing crypto ecosystem, but becomes a necessary connection point between the two by embedding the gap between the traditional financial structure and the crypto world.
This positioning allows Galaxy to enjoy both the growth dividends brought by innovation in the crypto industry and to earn stable revenue by providing a compliance framework familiar to traditional financial institutions.With the further institutionalization of crypto assets, Galaxy, a model that combines Wall Street genes and crypto thinking, is likely to become an important channel for traditional funds to enter the digital asset world.
However, Galaxy also faces many challenges: strong cyclicality in the crypto market, uncertainty in the regulatory environment, and execution risks of transitioning to AI infrastructure.Whether the relationship between traditional businesses and innovative businesses, cyclical businesses and stable businesses will determine the future development space of Galaxy Digital.
Ultimately, Galaxy Digital’s success is not only about a company, but also an important touchstone to test whether the traditional finance and crypto world can be effectively integrated.Its practice will provide valuable reference for the entire industry, and no matter what the result is, it has profoundly affected the evolution path of crypto asset management.
