Supervisory Sandbox

Definition ∞ A Supervisory Sandbox is a regulatory framework that permits financial technology firms to test innovative products, services, or business models in a controlled environment with reduced regulatory requirements. This allows regulators to observe new technologies, like those in digital assets, while lessening potential risks. It fosters advancement under close monitoring.
Context ∞ Supervisory sandboxes are increasingly used by governments and financial regulators worldwide to experiment with blockchain and digital asset innovations without immediately imposing full regulatory burdens. News frequently covers the launch of new sandboxes and the projects accepted into them, indicating a proactive approach to understanding emerging technologies. These initiatives aim to strike a balance between innovation and consumer protection.