Grove purchases $50M of Class B Notes in Galaxy’s tokenized crypto-backed CLO on Avalanche

Overview

Galaxy has closed Galaxy CLO 2025-1, a new-issue tokenized CLO on Avalanche designed to support Galaxy’s lending activities. Grove is participating in the transaction by purchasing $50 million of Class B Notes, gaining exposure to a diversified portfolio of overcollateralized, crypto-collateralized loans originated by Arch and held with institutional-grade custody and oversight.

This is one of the earliest examples of a crypto-backed CLO executed with onchain issuance and tokenized tranches, establishing a practical model for how structured credit can move onto blockchain infrastructure without sacrificing the legal and governance standards institutions require.

At a glance

• Transaction: Galaxy CLO 2025-1
• Closed size: $75 million
• Structure: New-issue CLO issued under a U.S.-law indenture
• Asset type: Crypto-collateralized loan portfolio (overcollateralized loans)
• Network: Avalanche (EVM-compatible token issuance)
• Grove participation: $50 million purchase of Class B Notes
• Originator: Arch
• Manager / issuer: Galaxy Asset Management
• Trustee + qualified custodian: Anchorage
• Token venue: Notes listed on INX for access by qualified investors
• Payments: Monthly distributions
• Stated initial maturity: December 2027
• Transparency layer: Accountable dashboard for continuous, verifiable collateral and performance reporting
• Deal terms (senior): Includes a senior coupon of SOFR + 570 bps

Why this matters

This is a major milestone in the evolution of tokenization. The onchain economy has proven it can hold tokenized Treasuries and funds. The next step is expanding into more complex, cash-flowing instruments without compromising the compliance, controls, and risk discipline that define institutional markets.

A tokenized CLO is meaningful because it combines:

• A well-understood institutional wrapper (structured finance with tranching, coverage tests, and governance standards), with
• Onchain execution (programmable issuance, token lifecycle management, and lower-friction settlement), and
• A pathway to more systematic transparency than legacy private credit typically provides.

This deal represents a concrete move toward institutional-grade credit as a native building block of onchain finance, not a narrative.

What is Galaxy CLO 2025-1

Galaxy CLO 2025-1 is a collateralized loan obligation where:

1. A portfolio of crypto-collateralized loans is aggregated into a dedicated vehicle.
2. The vehicle issues multiple tranches of notes (including Class A and Class B) under a full U.S.-law indenture.
3. Those notes are tokenized on Avalanche, enabling transfer and settlement using blockchain rails.
4. Investors receive exposure to the portfolio’s cash flows, governed by the deal’s legal documentation and structural protections.

Galaxy’s teams structured the transaction, tokenized the offering, and will administer and manage the CLO through Galaxy Asset Management, with Anchorage serving key fiduciary roles as trustee and qualified custodian.

Grove’s role

Grove is purchasing $50 million of Class B Notes in Galaxy CLO 2025-1.

This participation reflects Grove’s broader objective: integrating institutional-grade, cash-flowing assets into the onchain economy and doing it through frameworks that scale. A CLO is a format that global capital markets understand; tokenizing it on Avalanche introduces a new operating model for how that exposure can be issued, held, and transferred.

It also advances Grove’s onchain credit roadmap:

• Treasuries established reliability and foundational yield
• Tokenized funds expanded distribution and composability
• Structured credit is the next layer, bringing more sophisticated, professionally managed credit products onchain

“This transaction marks another meaningful step forward for onchain credit, demonstrating how familiar securitization structures can be brought onchain without compromising institutional standards. Anchoring Galaxy’s debut tokenized CLO underscores Grove’s role in enabling institutional-grade credit to be issued and allocated onchain, and we’re excited to partner with Galaxy and Avalanche to help advance the convergence of traditional credit markets and blockchain-based infrastructure” — Sam Paderewski, Grove Labs

Under the hood

Tokenized notes on Avalanche: The CLO’s debt tranches are issued as ERC-compatible tokens on Avalanche, enabling low-cost transfers and more seamless settlement mechanics than traditional post-trade workflows.

Market access for qualified participants: The tokens are listed on INX, providing a regulated venue for access by qualified investors.

Institutional custody and administration: Anchorage serves as bond trustee and qualified custodian, bringing established controls and accountability to the structure.

Verifiable transparency with Accountable: Galaxy partnered with Accountable to provide continuous, real-time verification for both onchain and offchain components of the portfolio. The goal is straightforward: reduce information gaps and enable investors to monitor collateralization and performance with significantly better visibility than legacy private credit reporting cycles typically allow.

Risk discipline through structure: The transaction is designed with structural protections common to institutional structured credit (including coverage tests and subordination) and conservative collateralization practices at the loan level. The result is a credit product that is both institutional in design and onchain in execution.

The bigger picture

The long-term opportunity is not simply “tokenizing securities.” It is building a market structure where:

• Credit can be issued with institutional rigor
• Settled and administered with modern infrastructure
• Observed with verifiable, continuous transparency
• And ultimately integrated into onchain systems responsibly

Galaxy CLO 2025-1 is an early blueprint for that direction. Grove’s participation is aligned with a simple view: if DeFi is going to scale sustainably, it needs durable, crypto-exogenous cash flows and it needs them in formats that institutions recognize and can underwrite.

Thank you

Thank you to the teams at Galaxy, Avalanche, Arch, Anchorage, INX, and Accountable for the collaboration and infrastructure that made this issuance possible.

Important information and disclaimers

This post is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security or investment product. Any offering of the products referenced herein will be made, if at all, only to eligible investors in accordance with applicable laws, regulations, risk parameters, and final documentation.

Tokenized products and onchain credit involve risk, including possible loss of principal. Risks may include (among others) credit risk, counterparty risk, collateral volatility, market risk, legal and regulatory risk, operational risk, and smart contract / blockchain infrastructure risk. Listings or tokenization do not guarantee liquidity or performance. Performance is not guaranteed.