After a rough start to the week with massive liquidations, the crypto market has finally experienced some relief, with a rebound driven by favorable broader macroeconomic changes.
Liquidations over the past day totaled $384.4 million, a significant drop from previous days. Meanwhile, the global market cap rose 1.1% over the last day.
According to Coinglass data, $384.4 million was liquidated in the past 24 hours. Of this, $138.2 million came from long positions, while $246.2 million were short positions.
Specifically, Bitcoin saw $186.7 million in liquidations, with $146.0 million attributed to short positions. Ethereum experienced $73.6 million in liquidations, with $40.3 million from long positions and $33.1 million from short positions.
Meanwhile, Bitcoin regained ground over $80,000, trading at $82,299. This marked a 3.6% increase over the past day.
Notably, the recovery could be attributed to recent diplomatic developments. According to Bloomberg, Ukraine agreed to a temporary 30-day ceasefire in response to a US proposal. This has reduced geopolitical tensions that had previously weighed on the market.
Furthermore, Ontario suspended 25% tariffs on electricity exports to Michigan, New York, and Minnesota. This was also a major step towards easing trade tensions.
US political figures, including House Speaker Mike Johnson, have also provided much-needed reassurance to the markets. Johnson suggested that President Trump’s economic policies, which initially contributed to market instability, would eventually stabilize the economy.
“Give the president a chance to have these policies play out,” he said.
In addition, White House Press Secretary Karoline Leavitt noted that the market dip represented a temporary state rather than a definitive or permanent trend.
“We are in a period of economic transition,” Leavitt stated.
She emphasized the idea that market numbers, such as stock prices, trading volumes, and liquidations, reflect a specific point in time and can evolve. These combined factors—political reassurances, easing trade tensions, and a reduction in geopolitical risks—have contributed to the crypto market’s recent recovery.
The European Stability Mechanism (ESM) has raised concerns that the United States’ growing support for dollar-backed stablecoins could threaten Europe’s financial stability and monetary sovereignty.
These concerns come as stablecoin regulation gains traction in the US. US national banks and federal savings associations can offer services without prior regulatory approval.
EU Warns US Stablecoins Could Threaten Euro Stability
Pierre Gramegna emphasized the urgency of the European Central Bank’s (ECB) digital euro initiative as a countermeasure. As the Managing Director of the ESM, Gramegna urged expedition to preserve the country’s monetary sovereignty and financial stability.
“It could eventually reignite foreign and US tech giant’s plans to launch mass payment solutions based on dollar-denominated stablecoins. And, if this were to be successful, it could affect the euro area’s monetary sovereignty and financial stability,” Gramegna stated at a Eurogroup meeting.
The EU is advancing its digital euro project to safeguard its financial independence. The ECB has long warned that reliance on US-backed stablecoins could weaken the euro.
He echoes recent remarks by ECB official Piero Cipollone during an early February interview. Then, Cipollone indicated that the Trump administration’s support for stablecoins would likely accelerate legislation surrounding the digital euro. Such an outcome, he said, would position it as a necessary alternative.
“The US and Europe have differing views on stablecoins. The Trump administration sees them as a tool to strengthen the US dollar’s global presence, whereas the ECB fears they could destabilize Europe’s financial system,” Cipollone explained.
The ESM supports the ECB’s digital euro project and the European Commission’s efforts to revise the MiCA (Markets in Crypto-Assets) directive. Gramegna emphasized that these measures are critical in preventing a scenario in which European consumers and businesses become overly reliant on US-backed stablecoins.
Federal Reserve Chair Jerome Powell has also advocated for stablecoin regulation to solidify their role in financial markets. Meanwhile, new rules now permit US banks to offer stablecoin services, signaling further integration of stablecoins into traditional finance (TradFi).
These developments could accelerate the dominance of US-backed stablecoins in global transactions. Reports suggest that even Bank of America (BoA) is exploring launching its own stablecoin, while Circle CEO Jeremy Allaire is pushing for mandatory US registration of stablecoin issuers.
The debate over stablecoins mirrors broader geopolitical concerns. The dollar’s dominance in digital payments could grow as US financial institutions integrate stablecoins into their services. This could limit the euro’s influence.
European policymakers advocate for a strong regulatory framework and an accelerated timeline for the digital euro’s rollout to counter this.
Perpetuals, Made In USA coins, and meme coins are the top three crypto narratives to watch for the second week of March. Perpetuals tokens like HYPE and WOO are down over 12%, but strong trading activity and high revenue suggest a potential rebound.
Made In USA coins, including PI, ADA, and HBAR, have suffered major losses amid broader market turmoil, but the recovery could be near if market conditions stabilize. Meme coins have been hit hard, but their history of sharp rebounds suggests they could lead the next rally if sentiment shifts.
Perpetuals
Perpetuals coins appear to be setting up for a rebound after a rough week, with HYPE and WOO both down more than 12% in the last seven days. Perpetuals platforms are exchanges that allow traders to buy and sell perpetual futures contracts, which have no expiration date.
These platforms use a funding mechanism to keep contract prices aligned with the spot market while enabling traders to take long or short positions with leverage.
Despite the recent downturn in some perpetuals tokens, the sector continues to see strong activity, with high trading volumes and fees generated across key platforms.
Biggest Coins by Market Cap (Perpetuals). Source: CoinGecko.
However, this level of dominance also suggests that the market has room for competitors to emerge and challenge its position. Arkham, for instance, has surged 14% in the last 24 hours. That signals that some traders are betting on alternative projects within the perpetuals ecosystem.
Overall, these trends make perpetuals one of the must-watch crypto narratives of the week.
Made In USA Coins
The biggest Made In USA coins have all suffered significant losses in the past week, with PI dropping 22.6%. ADA and HBAR both down 18.9%. Made In USA coins refer to cryptocurrencies that have strong ties to the United States, whether through their founding team or company headquarters.
This category includes projects that often attract regulatory scrutiny or benefit from US-based institutional backing. The latest downturn aligns with broader market weakness, as both the crypto and stock markets have been hit hard in the past 24 hours.
Biggest Made In USA Coins by Market Cap. Source: CoinGecko.
The US stock market saw a massive $4 trillion wipeout following Trump’s push for new tariffs. Given the scale of this correction, a potential rebound could be on the horizon if investors view the recent dip as an overreaction. That could positively impact crypto, driving a new surge.
Historically, sharp declines in both crypto and equities have been followed by strong recoveries, especially when macroeconomic fears subside.
This volatility has been evident in the past week, as the biggest meme coins have taken a heavy hit. Dogecoin (DOGE), the largest meme coin by market cap, has dropped more than 17% in the last seven days.
TRUMP is down over 14%, and PEPE and BONK have both lost more than 10% during the same period.
Biggest Meme Coins by Market Cap. Source: CoinGecko.
However, if the crypto market stages a rebound this week, meme coins could see some of the strongest recoveries. Historically, these assets tend to outperform in fast-moving uptrends due to their speculative nature and the rapid inflow of retail interest.
The last major surges in meme coins occurred after broader market rebounds reignited hype and aggressive buying activity.
If sentiment shifts and liquidity returns, DOGE, TRUMP, PEPE, and BONK could quickly reclaim lost ground. That could potentially lead to another wave of explosive gains in the meme coin sector.
Ethereum (ETH) is facing a sharp correction, dropping 11% over the past week as bearish momentum continues to dominate. The Relative Strength Index (RSI) remains weak, showing a lack of strong buying pressure, while the Directional Movement Index (DMI) confirms that sellers are still in control.
Additionally, the Exponential Moving Averages (EMA) are in a firmly bearish structure, suggesting that ETH could soon test critical support levels at $1,756 and potentially fall below $1,700 for the first time since October 2023.
ETH RSI Shows the Lack Of Buying Pressure
Ethereum Relative Strength Index (RSI) is currently at 34.4, recovering slightly after briefly dipping to 27.4 yesterday. The RSI has remained below the 50 mark for three consecutive days, signaling that bearish momentum is still dominant.
The RSI measures the speed and magnitude of recent price changes to assess whether an asset is overbought or oversold.
Typically, an RSI above 70 indicates overbought conditions, suggesting potential for a pullback, while an RSI below 30 signals oversold conditions, implying that selling pressure may be overextended and a bounce could be imminent.
With ETH’s RSI now at 34.4, it suggests that while the asset is still in bearish territory, the extreme selling pressure seen yesterday has eased slightly.
The brief dip below 30 signaled an oversold condition, which often leads to short-term relief rallies. However, for ETH to regain bullish momentum, the RSI would need to climb back above 50, indicating a shift in market sentiment.
Until then, any upward movement could face resistance, and the broader trend remains weak unless sustained buying pressure pushes ETH out of this bearish zone.
Ethereum DMI Shows The Current Downtrend Is Strong
Ethereum Directional Movement Index (DMI) chart shows that its Average Directional Index (ADX) is currently at 29.82, rising from 21.9 yesterday.
The ADX measures the strength of a trend, with values above 25 indicating a strong trend and readings below 20 suggesting a weak or nonexistent trend. Given the ADX’s sharp increase, it confirms that ETH’s ongoing downtrend is strengthening.
The +DI (positive directional index) has dropped to 15.4 from 23.1 in the past day, while the -DI (negative directional index) has surged to 37.8 from 27.3, reinforcing the dominance of sellers in the market.
With the -DI significantly above the +DI, it signals that bearish momentum is intensifying, and sellers continue to control ETH’s price action.
The decline in +DI suggests that buying pressure is weakening, making it more difficult for ETH to stage a recovery. Unless the +DI begins to rise and crosses above the -DI, ETH’s price is likely to remain under pressure.
Given that the ADX is nearing 30 and still climbing, the downtrend appears well-established, and any short-term relief rallies may face strong resistance before a meaningful trend reversal can occur.
Ethereum Is Still Struggling Below $2,000
Ethereum Exponential Moving Average (EMA) lines are displaying a strongly bearish setup, with short-term EMAs positioned below long-term ones.
This alignment confirms the continuation of downward momentum, with ETH having dropped over 11% in the last 24 hours. If the current trend persists, ETH could test the critical support at $1,756, a level that could determine whether further declines are imminent.
A breakdown below this support would expose Ethereum’s price to a potential drop below $1,700, a level not seen since October 2023, further reinforcing bearish sentiment in the market.
However, if ETH manages to reverse its downtrend, the first key resistance to reclaim would be at $1,996. A successful breakout above this level could trigger a stronger recovery, pushing ETH toward the next resistance at $2,320.
If bullish momentum accelerates, Ethereum could extend gains toward $2,546, a level that would mark a complete shift in trend structure.
For this to happen, ETH would need sustained buying pressure and a bullish EMA crossover, signaling a transition out of its current bearish phase.
OKX pushed back against a recent article claiming that EU watchdogs were scrutinizing the exchange over its potential role in the Bybit hack. The firm received a MiCA license last month to meet EU compliance and claims that regulators are not investigating its services.
The latest allegations against the exchange were surprising as OKX proactively tried to cooperate in freezing the stolen money.
Today, the exchange reacted to a recent Bloomberg article that claimed EU regulators were quietly scrutinizing it. In the article, Bloomberg referenced Bybit’s statement and described that EU regulators are ‘zeroing in’ on OKX’s Web3 services.
“The Bloomberg article is misleading. It is unfortunate Bybit’s statements are spreading misinformation among journalists. We want to clarify for our community that OKX is not being investigated. This is simply a case of Bybit’s lack of security know-how. Our web3 wallet services are no different than what is offered by other industry players,” OKX wrote on X (formerly Twitter).
Also, Zhou claimed that 8% of the funds were laundered through a decentralized OXK wallet, and its President, Hong Fang, reached out to help. Zhou thanked her for this assistance.
However, this 8% of the stolen funds, which amounted to around $100 million, is at the center of the EU’s alleged scrutiny. Bloomberg reported that regulators are trying to determine whether OKX’s separate, decentralized Web3 service also falls under MiCA.
If so, the EU may even claim that OKX violated sanctions against North Korea.
All that is to say, this report doesn’t cite any new claims from Bybit except the exchange between Zhou and Hong. This interaction had a very cordial tone at the time, but OKX’s official statement is much more caustic today.
The firm absolutely refutes these claims and reiterates that Bybit was hacked because of its own security vulnerabilities.
“We will continue to help Bybit to strengthen the industry. But we absolutely refute the false claims by Bybit that are leading to misinformation about our role in what began as a serious security vulnerability on their exchange,” OKX wrote.
These claims are particularly concerning and don’t necessarily align with OKX’s proactive response after the hack. When the hack first happened, crypto sleuth ZachXBT specifically appreciated the firm’s willingness to help freeze stolen assets.
If this cooperation attracted regulatory scrutiny, some frustration is understandable. So far, Bybit hasn’t commented on any of these proceedings.
It’s important to remember that Bloomberg didn’t state that a criminal investigation was taking place, only that a confidential group of watchdogs was closely discussing the issue. It didn’t specifically touch on the actual laundering allegations.
XRP continues its decline, falling 10% over the past week as bearish momentum strengthens.
The fourth-largest cryptocurrency by market capitalization remains under pressure, with waning buying interest hinting at the possibility of further losses.
XRP’s Outlook Worsens as Buying Pressure Fades
Since reaching an all-time high of $3.40 on January 16, XRP has remained mostly within a descending parallel channel. This is a bearish pattern formed when an asset’s price moves between two downward-sloping parallel trendlines, indicating a downtrend.
When an asset’s price trades within this channel, it marks a period of decline during which sellers dominate, and buying activity is low. This has put significant downward pressure on XRP’s price in the past month.
XRP currently trades at $2.11, exchanging hands below its 20-day exponential moving average (EMA). This key moving average measures the asset’s average price over the past 20 trading days, giving more weight to recent prices to reflect short-term trends.
When an asset’s price falls below its 20-day EMA, it suggests that selling pressure is strong and the asset is in a bearish phase. This signals continued downside momentum for XRP unless buying interest increases to push the token’s price back above the EMA.
Further, XRP’s Chaikin Money Flow (CMF) is currently in a downtrend and is poised to breach its zero line. This indicator, which measures money flow into and out of an asset, is at 0.02 as of this writing.
When an asset’s CMF attempts to fall below zero, it reflects the weakening buying pressure and increasing selling dominance. This suggests that money is flowing out of XRP rather than into it, reinforcing the bearish outlook.
XRP Faces Bearish Pressure: Could It Crash to $1.47?
XRP risks dropping below $2 if new demand remains insignificant. In that scenario, it could plummet to $1.47, a low it last reached in November.
On the other hand, if selling pressure wanes and XRP sees an uptick in buying activity, it could push its price past the resistance at $2.81 toward the $3.40 all-time high.
Solana (SOL) has faced intense selling pressure, recently dropping below $120 – its lowest level since February 2024. It has declined more than 38% over the past 30 days, reinforcing its bearish momentum.
With sellers firmly in control, SOL now faces a critical test of support levels, while any potential recovery would need to break through key resistance zones to signal a shift in momentum.
Solana Ichimoku Cloud Shows a Strong Bearish Setup
Solana Ichimoku Cloud shows that the price is currently trading below both the blue Tenkan-sen (conversion line) and the red Kijun-sen (base line), indicating that the short-term trend remains bearish.
The price recently bounced from a local low but has not yet reclaimed these key resistance levels. Additionally, the Ichimoku cloud (Kumo) ahead is red, reflecting bearish sentiment in the market.
The cloud itself is positioned well above the current price, suggesting that even if SOL experiences a short-term recovery, it will likely face strong resistance near the $130 – $135 region.
The positioning of the Tenkan-sen below the Kijun-sen further supports the bearish outlook, as this crossover typically signals downward momentum.
For any signs of a trend reversal, SOL would need to break above both of these lines and ideally enter the cloud, which would indicate a potential transition to a neutral phase.
Until then, the bearish cloud ahead and the current weak price structure suggest that any rallies may be temporary before the broader downtrend resumes.
SOL DMI Shows Sellers Are Still In Control
Solana Directional Movement Index (DMI) chart reveals that its Average Directional Index (ADX) is currently at 33.96, a significant increase from 13.2 just two days ago.
The ADX measures trend strength, and a reading above 25 typically indicates a strong trend, while values below 20 suggest a weak or non-existent trend. Given this sharp rise, it confirms that SOL’s ongoing downtrend is gaining strength.
The +DI (positive directional index) has dropped to 11.71 from 15.5 two days ago but has slightly rebounded from 8.43 yesterday. In contrast, the -DI (negative directional index) sits at 32.2, up from 25.9 two days ago, though slightly down from 35 a few hours ago.
The relative positioning of the +DI and -DI lines suggests that sellers are still in control, as the -DI remains significantly higher than the +DI.
The recent dip in -DI from 35 to 32.2 could indicate some short-term relief, but with the ADX climbing quickly, it reinforces that the prevailing downtrend remains intact.
The slight bounce in +DI suggests minor buying pressure, but it’s not enough to shift momentum in favor of bulls. Until +DI rises above -DI or ADX starts declining, SOL’s bearish trend is likely to persist, with sellers dominating price action in the near term.
Will Solana Fall Below $110?
Solana Exponential Moving Average (EMA) lines continue to depict a bearish trend, with the short-term EMAs positioned below the long-term EMAs.
This alignment suggests that downward momentum remains dominant, even though the price is currently attempting a recovery. If this rebound gains strength, Solana’s price could face resistance at $130 and $135, key levels that must be cleared for any potential trend reversal.
A successful break above these resistances could push SOL toward $152.9, a significant level that, if breached with strong buying pressure, might pave the way for a rally toward $179.85 – the price level last seen on March 2, when SOL was added to the US crypto strategic reserve.
However, if the bearish structure remains intact and selling pressure resumes, Solana could retest the $115 and $112 support levels, both of which have previously acted as key price floors.
A failure to hold these supports could open the door for a deeper decline, possibly pushing SOL below $110 for the first time since February 2024.
Given the EMAs’ current positioning, the downtrend remains in control unless Solana reclaims key resistance levels and establishes a bullish crossover, signaling a shift in market sentiment.
Pi Network users, known as Pioneers, are expressing growing frustration over their inability to transfer their mined Pi Coins (PI) to the blockchain’s mainnet.
The concerns mount as the network’s Grace Period deadline approaches, leaving users with just four days to complete the necessary migration process.
Pi Network Sets March 14 Deadline for KYC and Mainnet Migration
The Pi Network has set a critical deadline for users to complete their Know Your Customer (KYC) verification and Mainnet migration. According to the announcement, Pioneers must finalize these processes by 8:00 AM UTC on March 14, 2025.
Failing to do so will result in the loss of most of their Pi holdings. However, coins mined within the past six months are exempt from this. The Grace Period, introduced to give users ample time to complete verification, has already been extended multiple times.
As per the Pi team, these extensions were designed to accommodate as many legitimate users as possible, ensuring their balances could be verified and migrated.
“The end of the Grace Period is inevitable to make sure the network can move on in its new phase without large sums of unverified and unclaimed mobile balances,” the blog read.
Despite this urgency, numerous Pioneers have reported issues preventing them from transferring their PI to the Mainnet. Among them is Jaro Giesbrecht. In a post on X (formerly Twitter), Giesbrecht claimed he had completed the Mainnet checklist but remained stalled.
“The Pi network has done nothing to help solve this problem. It is a very common problem. Pi has done nothing to help fix this and other problems,” he wrote.
Giesbrecht intensified his criticism, arguing that the deadline should be extended until all Pioneer issues are resolved. He suggested that failing to do so would render the entire process ineffective and raise concerns about the project’s legitimacy.
The issue appears widespread, with other Pioneers echoing similar complaints on X.
“The whole process is a joke. ~80% of my balance shows as unverified, although all of my security circle has completed KYC. No additional actions are listed to be taken in order to clear this up. Furthermore, nobody got back to me on a support ticket I opened weeks ago. What gives?” remarked a user.
Furthermore, users also noted that Step 9 on the Mainnet checklist—”Migrate to Mainnet”—remains unresolved, leaving their Pi balances in limbo.
“What’s the problem with the mainnet migration? Are we to forfeit our mined PI due to an error from your end?” a user posted.
Pi Network Mainnet Migration Issues. Source: X/Abissan
Pi Coin Sees Double-Digit Losses Amid Binance Listing Uncertainty
While the looming deadline worries many, others eagerly await March 14, widely recognized as Pi Day. The occasion has sparked optimism for a potential price surge despite Pi Coin’s recent struggles in the market.
“As long as we don’t break $1.2 support, I’m bullish. PI day is approaching, and hopefully, we will see a pump,” an analyst wrote.
Over the past week, PI has lost 16.3% of its value. Moreover, in the last 24 hours, it suffered a double-digit drop, trading at $1.40 at press time. This represented a decline of 12.2% over the past day alone.
However, these tools do not grant users full authority, as Binance retains the final decision-making power. Therefore, the uncertainty surrounding the decision has led to frustration.
In protest, they flooded the exchange with one-star reviews on Google Play Store. A similar decline in ratings was observed on Bybit. The exchange’s CEO had previously called Pi Network a scam.
SafeMoon’s price has climbed over 25% in the past week amid the broader market volatility. This double-digit price gain has been fueled by the uptick in the token’s demand following the project’s migration from BNB Chain to Solana.
However, profit-taking and increased selling pressure are now threatening to erase some of SFM’s recent gains. This analysis provides the details.
SafeMoon Battles Growing Sell-Offs
An assessment of the SFM/USD one-day chart highlights the growing selling pressure within SFM’s spot markets. A notable indicator of this trend is the token’s negative Balance of Power (BoP), which is at -0.96 at press time.
An asset’s BoP indicator compares buyers’ and sellers’ strengths by analyzing price movements within a given period. When its value is negative like this, it indicates that sellers have more control, meaning downward pressure is stronger, and the asset is likely experiencing a bearish trend.
This suggests weakening bullish momentum among SFM holders and hints at declines if selling pressure continues.
Furthermore, SFM’s price has dropped 8% over the past 24 hours, causing the altcoin to trade near its 20-day exponential moving average (EMA).
This moving average measures an asset’s average price over the past 20 trading days, giving more weight to recent prices to identify short-term trends.
As with SFM, when an asset’s price is poised to break below the 20-day EMA, it signals increased selling pressure. It is a sign of weakening bullish momentum and a shift toward a bearish trend.
SFM Finds Key Support at $0.000061
A successful breach of the dynamic support offered by SafeMoon’s 20-day EMA at $0.000061 would strengthen the bearish trend. In this scenario, the altcoin’s price could plummet further to $0.000047.
However, a spike in new demand would invalidate this bearish outlook. If spot inflows rally, it could drive SFM’s price above the resistance at $0.000068 toward its multi-year high at $0.000011.
Regulatory sandboxes have emerged as a concept to drive innovation in a controlled setting. They allow companies to test new crypto products and services while regulators observe and adapt regulations. While jurisdictions like the UK, the UAE, and Singapore have already created sandboxes, the US has yet to create one at the federal level.
BeInCrypto spoke with representatives of OilXCoin and Asset Token Ventures LLC to understand what the US needs to build a federal regulatory sandbox and how it can unify a fragmented testing environment for innovators.
A Patchwork Approach
As the name suggests, regulatory sandboxes have emerged as a tool for providing a controlled testing ground. This environment allows entrepreneurs, businesses, industry leaders, and lawmakers to interact with new and innovative products.
According to the Institute for Reforming Government, 14 states in the United States currently have regulatory sandboxes for fintech innovation.
Of those, 11 are industry-specific and cover other sectors like artificial intelligence, real estate, insurance, child care, healthcare, and education.
Utah, Arizona, and Kentucky are the only jurisdictions among these states with an all-inclusive sandbox. Meanwhile, all but 12 states are currently considering legislation to create some regulatory sandbox for innovation.
Due to its relatively short existence, the crypto market has underdeveloped legislation. While state-level sandboxes enable innovators to demonstrate their products’ capabilities to the public, they are significantly constrained by the lack of federal regulatory sandboxes.
The Need for Federal Oversight
Though statewide efforts to create regulatory sandboxes are vital for innovation, entrepreneurs and businesses still face constraints in developing across borders or reaching an audience at a national level.
Rapid advancements in fields like blockchain and artificial intelligence (AI) add a particular layer of uncertainty, given that existing legal frameworks may not be well-suited to these technologies.
At the same time, regulators may face difficulties in developing appropriate rules for these technologies due to a potential lack of familiarity with these constantly changing industries.
As a result, industry participants are increasingly calling for creating a federal regulatory sandbox. This environment could be a collaborative framework to address the gap, facilitating communication and knowledge sharing between regulators and industry stakeholders.
“The implementation of a federal regulatory sandbox in the United States has the potential to significantly enhance both innovation and regulatory oversight by reducing the uncertainties often associated with navigating the regulatory landscape across state lines. Such an initiative could help establish a coherent framework characterized by uniformity, continuity, and a conducive environment for innovation,” said Paul Talbert, Managing Director of ATV Fund.
According to Rademacher and Talbert, this proposal would meet the needs of all players involved.
Benefits of a Federal Regulatory Sandbox
A sandbox provides innovators with a controlled environment to test products under regulatory oversight without the immediate burden of full compliance with rules that may not yet fit their technology.
It also allows regulators to acquire firsthand insights into blockchain applications, facilitating the creation of more knowledgeable and flexible regulatory policies.
“Startups should have clear eligibility criteria to determine their qualification for participation, while regulators must outline specific objectives—whether focused on refining token classification frameworks, testing DeFi applications, or improving compliance processes,” Rademacher said.
It could also help the United States reinforce its position as a leader in technological innovation.
“By fostering innovation through simplicity, regulatory certainty, and conducive environments, the United States can significantly strengthen its competitive position in the global fintech landscape,” Talbert added.
While the United States has stalled in creating a federal framework for fintech innovation, other jurisdictions around the world have already gained significant ground in this regard.
Global Precedents
The Financial Conduct Authority (FCA), which regulates the United Kingdom’s financial services, launched the first regulatory sandbox in 2014 as part of Project Innovate. This initiative aimed to provide a controlled environment for testing innovative products.
The government asked the FCA to establish a regulatory process to promote new technology-based financial services and fintech and ensure consumer protection.
The United Arab Emirates (UAE) and Singapore, in particular, have made progressive strides in creating federal regulatory sandboxes.
The UAE, for example, currently has four different sandboxes: the Abu Dhabi Global Market (ADGM) Regulation Lab, the DSFA Sandbox, the CBUAE FinTech Sandbox, and the DFF Regulation Lab.
Their focus areas include digital banking, blockchain, payment systems, AI, and autonomous transport.
Meanwhile, the Monetary Authority of Singapore (MAS) launched its Fintech Regulatory Sandbox in 2016. Three years later, MAS also launched the Sandbox Express, providing firms with a faster option for market testing certain low-risk activities in pre-defined environments.
“The success of regulatory sandboxes in jurisdictions such as the United Kingdom, Singapore, and the United Arab Emirates has highlighted the importance of key attributes: regulatory collaboration, transparent processes, continuous monitoring, and the allocation of dedicated resources. As a result, a growing number of jurisdictions worldwide are looking to replicate the frameworks established by these pioneering countries to strengthen their competitive position in the global fintech landscape,” Talbert said.
Rademacher believes these jurisdictions’ innovations should prompt the United States to accelerate its progress.
For that to happen, the United States must overcome certain hurdles.
Challenges of a Fragmented US Regulatory Landscape
A fragmented network of federal and state agencies overseeing financial services presents a key challenge to establishing a US federal regulatory sandbox.
“Unlike other countries with a single financial authority overseeing the market, the U.S. has multiple agencies—including the SEC, CFTC, and banking regulators—each with different perspectives on how digital assets should be classified and regulated. The lack of inter-agency coordination makes implementing a unified sandbox more complex than in jurisdictions with a single regulatory body,” Rademacher told BeInCrypto.
Yet, in recent years, important SEC and CFTC actors have expressed interest in adopting a more favorable regulatory approach to innovation.
“Even though I tend to be more of a beach than a sandbox type of regulator, sandboxes have proven effective in facilitating innovation in highly regulated sectors. Experience in the UK and elsewhere has shown that sandboxes can help innovators try out their innovations under real-world conditions. A sandbox can provide a viable path for smaller, disruptive firms to enter highly regulated markets to compete with larger incumbent firms,” Peirce said in a statement last May.
However, the full scope of national regulations far exceeds the authority of these two entities.
Congressional and Constitutional Hurdles
Any legislative measure to develop a federal regulatory framework for sandboxes in the United States would have to undergo Congressional approval. Talbert highlighted several potential constitutional dilemmas the promotion of an initiative of this nature may face.
“These dilemmas include issues related to the non-delegation doctrine, which raises concerns about the constitutionality of delegating legislative power; equal protection considerations under the Fifth Amendment’s Due Process Clause; challenges arising from the Supremacy Clause; and implications under the Administrative Procedure Act (APA) and principles of judicial review,” he said.
To address these complexities, Congress must enact clear legal boundaries that ensure a regulatory framework is both predictable and open. Given the current administration’s emphasis on technological innovation, the prospects for creating a sandbox appear positive.
“Given the current composition of Congress, which aligns with the political orientation of the new executive branch, there may be a timely opportunity for regulatory reform. Such reform could facilitate the creation of a cohesive federal regulatory framework and enhance collaboration among federal agencies,” Talbert told BeInCrypto.
However, creating a federal regulatory sandbox is not a one-size-fits-all solution.
Balancing State Autonomy and Federal Regulations
State autonomy is enshrined in the US Constitution. This protection means that, even though a regulatory sandbox may exist at the national level, individual states still have the authority to restrict or prohibit sandboxes within their jurisdictions.
Encouragingly, most US states are already exploring regulatory sandboxes, and the states that have already implemented them represent diverse political viewpoints.
However, other considerations beyond political resistance must also be addressed.
“A federal regulatory sandbox might also face opposition from established financial institutions, including banks, which may perceive potential threats to their existing business models. Furthermore, federal budgetary constraints could impede the government’s capacity to support the development and maintenance of a federal regulatory framework,” Talbert added.
Effective federal regulations will also require a balance between businesses’ concerns and regulators’ responsibilities.
“The two biggest risks are overregulation—imposing excessive restrictions that undermine the sandbox’s purpose—or underregulation, failing to provide meaningful clarity. If the rules are too restrictive, businesses may avoid participation, limiting the sandbox’s effectiveness. If they are too lax, there is a risk of abuse or regulatory arbitrage. A well-executed federal regulatory sandbox should not become a bureaucratic burden but rather a dynamic framework that fosters responsible growth in the digital asset space,” Rademacher told BeInCrypto.
Ultimately, the best approach will require coordination from different governing bodies, industry stakeholders, and bipartisan collaboration.
Fostering Collaboration for a Successful Sandbox
Due to recent strained communication between tech and federal agencies, Rademacher believes fostering a cooperative atmosphere is essential for creating a functional federal sandbox.
“The approach must be collaborative rather than adversarial. Agencies should view the sandbox as an opportunity to refine regulations in real time, working alongside industry participants to develop policies that foster responsible innovation. Involvement from banking regulators and the Treasury Department could also be valuable in ensuring that digital assets are integrated into the broader financial system in a responsible manner,” he said.
Achieving this requires a bipartisan approach to harmonizing regulatory goals and setting clear boundaries. Industry collaboration with lawmakers and regulators is vital to showing how a sandbox can promote responsible innovation while safeguarding consumers.
“Its success will ultimately depend on whether it serves as a bridge between innovation and regulation, rather than an additional layer of complexity,” Rademacher concluded.
