Private DeFi Pools – How Commercial Banks Bypass MiCA Regulations

The EU’s MiCA (Markets in Crypto-Assets) regulation, which came into force at the end of 2024, was intended to regulate the crypto-asset market. However, its loopholes, especially in the context of decentralized finance (DeFi), have created space for innovative – and controversial – strategies by financial institutions. Commercial banks, using private DeFi pools, are building a parallel financial system that combines the benefits of DeFi with regulatory flexibility.

MiCA and DeFi – the gap in the definition of decentralization

Legal ambiguity as a loophole for institutions

According to Recital 22 of the MiCA preamble, “fully decentralized” protocols are not subject to regulation. The problem is that the regulation does not specify what “fully decentralized” means. Vyara Savova from the European Crypto Initiative emphasizes:
“DeFi currently exists in a regulatory vacuum. Banks are taking advantage of this lack of definition by creating hybrid models that technically meet the requirements but retain control over capital flows.”.

Key MiCA Limitations for DeFi:

• Lack of clear guidelines for token governance

• Unspecified requirements for liquidity pools

• Lack of KYC/AML enforcement mechanisms in open protocols

Private DeFi pools mechanism – parallel system architecture

What are permissioned liquidity pools?

Private DeFi pools are closed environments where:

• Participants are whitelisted (e.g. via Fireblocks)

• Transactions take place on private blockchain instances (Ethereum Enterprise, Hyperledger Besu)

• Smart contracts have backdoors enabling intervention by regulators

Example: Aave Arc – institutional version of Aave Protocol, where:

• 30 banks and funds (including CoinShares, Celsius) have access to a separate liquidity pool

• Each transaction requires KYC/AML by a trusted operator (custodian)

• Statistics (June 2025):

  • TVL: $1,2 billion

  • Average Daily Volume: $45 million

  • Dominant assets: USDC (78%), wBTC (15%)

Case study: How do banks use private pools?

Société Générale – Forge model

The French financial giant has launched a private pool on Ethereum Enterprise, offering:

• Tokenization of corporate bonds with automatic KYC via Chainalysis

• Interest rate swaps between EUR and USDC with a spread of 0,25%

• Front-running protection thanks to private mempools

Effect? $890 million passed through the platform in Q1 2025, with regulatory costs 40% lower than in traditional systems.

Deutsche Bank and Fireblocks – Hybrid Custody

German bank integrates private pools with traditional products:

• Private banking customers can allocate up to 15% of the portfolio in DeFi

• Automatic tax reporting via API to local offices

• Counterparty risk limited to whitelisted entities

Regulatory Controversies and Risks

The paradox of pseudo-decentralization

• Centralization of liquidity: 68% of TVL in private pools controlled by 5 banks

• Price manipulation: The lack of a public order book makes it difficult to detect fraud

• Conflict of Interest: Banks act as custodians, market makers and regulators

ESMA's response

The European Securities and Markets Authority (ESMA) announces:

• Smart contract audits for private pools from Q3 2025

• Exposure limit – max 5% of the bank's equity in DeFi

• Backdoor disclosure requirement in code

Technical data and tokenomics

Aave Arc (aArc)

• Blockchain: Ethereum (private instance)

• Token: aArc (ERC-20 with KYC module)

• Accommodation and dinner are included.: $12,45 (AAVE affiliated)

• Capitalization: $320 million

• Quotations: CoinGecko, fireblocks

Fireblocks WHITE

• token utility: Access to 50+ private pools

• Supply: 10 million (staking required)

• Accommodation and dinner are included.: $ 4,78

• Exchange: Institutional OTC only

Summary – A New Era of Financial Hypocrisy

Private DeFi pools are a strategic response by banks to the MiCA challenges. On the one hand, they allow you to profit from blockchain technology, on the other – they maintain control over the market through closed ecosystems.

Key takeaways:

• MiCA Loophole has become the driving force of institutional pseudo-decentralization

• Systemic risk increases with the concentration of liquidity in the hands of a few players

• The Future of DeFi may belong to hybrid models where "decentralization" is a marketing illusion

As Marina Markezic of the EUCI warns:
"Private pools are the Trojan Horse of traditional finance. If we allow them to dominate, we will lose the essence of Web3 – freedom from intermediaries".

Investors should be vigilant: participating in private pools means accepting the rules dictated by banks, not the community. This is not a revolution, but an evolution of the old system in digital guise.