The Drosophila GATA factor Serpent interacts with the RUNX factor Lozenge to activate the crystal cell program, whereas SerpentNC binds the Friend of GATA protein U-shaped to limit crystal cell production. Here, we identified a lozenge minimal hematopoietic cis-regulatory module and showed that lozenge-lacZ reporter-gene expression was autoregulated by Serpent and Lozenge. We also showed that upregulation of u-shaped was delayed until after lozenge activation, consistent with our previous results that showed u-shaped expression in the crystal cell lineage is dependent on both Serpent and Lozenge. Together, these observations describe a feed forward regulatory motif, which controls the temporal expression of u-shaped. Finally, we showed that lozenge reporter-gene activity increased in a u-shaped mutant background and that forced expression of SerpentNC with U-shaped blocked lozenge- and u-shaped-lacZ reporter-gene activity. This is the first demonstration of GATA:FOG regulation of Runx and Fog gene expression. Moreover, these results identify components of a Serpent cross-regulatory sub-circuit that can modulate lozenge expression. Based on the sub-circuit design and the combinatorial control of crystal cell production, we present a model for the specification of a dynamic bi-potential regulatory state that contributes to the selection between a Lozenge-positive and Lozenge-negative state.