On 22 Dec 2025, the HKMA, CEDB, and IPD launched the Intellectual Property Financing Sandbox to enable authorized institutions to pilot IP-based financing arrangements in a risk-controlled environment. The initiative addresses valuation and market liquidity challenges, with HKMA and the Government planning to develop supervisory guidance and valuation standards based on Sandbox insights.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Launch of Intellectual Property Financing Sandbox
On 22 Dec 2025, the Hong Kong Monetary Authority (HKMA), in collaboration with the Commerce and Economic Development Bureau (CEDB) and the Intellectual Property Department (IPD), launched the Intellectual Property (IP) Financing Sandbox to assist pilot sectors in leveraging IP assets for financing. This initiative, announced in the Chief Executive’s 2025 Policy Address, aims to address challenges in IP financing such as valuation difficulties and the lack of a liquid secondary market through a risk-controlled environment for authorized institutions (AIs).
Sandbox Structure and Purpose
The Sandbox provides AIs with a collaborative platform to conduct pilot trials of IP-based financing arrangements, including verifying IP validity, obtaining independent valuations, performing credit risk assessments, creating security interests, and processing loan drawdowns. Participating AIs will test the full transaction lifecycle with support from professional service providers (e.g., IP valuation firms and legal practitioners), while receiving feedback from HKMA and other stakeholders to refine their arrangements.
Subsequent Regulatory and Policy Development
Based on insights gained from the Sandbox, the HKMA will share good practices and consider developing further supervisory guidance on credit risk management for IP financing. Concurrently, the Government (via CEDB and IPD) will assess the need for local IP valuation guidelines incorporating stakeholder-acceptable standards, with the operating principles detailed in the Annex.
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