In a major move to support innovation in the European crypto sector, the European Union has launched a regulatory sandbox designed specifically for cryptocurrency and DeFi startups. The initiative allows emerging companies to test their products and services under supervised conditions, with regulatory guidance and risk management frameworks provided by EU authorities.
The sandbox, announced in September 2025, targets projects focused on areas such as decentralized finance, tokenized assets, blockchain-based payments, and digital identity solutions. Startups admitted to the program will benefit from accelerated approvals, legal guidance, and access to pilot programs with partner banks and financial institutions.
According to the European Commission, the sandbox is intended to reduce barriers to entry for small and medium-sized enterprises while maintaining consumer protection and compliance with anti-money laundering regulations. “This is about creating a safe space for innovation,” said Marie Dubois, Head of EU Digital Finance Strategy. “Startups can experiment with new business models without immediately facing the full weight of regulatory obligations.”
The program is structured in multiple phases: initial testing with limited capital, live trials with selected customers, and a full rollout once projects meet compliance and security benchmarks. Startups will also receive mentoring from regulators and industry experts, ensuring that innovation aligns with EU financial and technological standards.
Analysts note that the sandbox could position Europe as a global hub for crypto innovation, competing with similar initiatives in Singapore, the UK, and the US. By providing a clear regulatory framework and direct engagement with authorities, the EU aims to attract venture capital investment and accelerate the commercialization of blockchain solutions.
Industry participants have welcomed the announcement. Liam Keller, CEO of a Berlin-based DeFi startup, said, “Access to a sandbox with regulatory support is a game-changer. It allows us to refine our product while ensuring we are compliant from day one.”
As digital finance continues to expand, the EU Crypto Sandbox is expected to foster cutting-edge solutions, increase market transparency, and promote safer adoption of cryptocurrencies and DeFi technologies across the continent.
