The Hong Kong Monetary Authority (HKMA) launched the Intellectual Property (IP) Financing Sandbox in collaboration with the Commerce and Economic Development Bureau (CEDB) and the Intellectual Property Department (IPD) on 22 December 2025.
The initiative which was announced in the Chief Executive’s 2025 Policy Address aims to provide a collaborative and risk-controlled environment for banks to pilot IP financing arrangements with the support of the insurance, valuation, legal and other professions.
It was launched following engagement by the HKMA, CEDB and IPD with The Hong Kong Association of Banks, Chinese Banking Association of Hong Kong and relevant stakeholders in the IP financing ecosystem.
The IP Financing Sandbox seeks to explore ways to address the unique challenges of using IP assets such as patents, trademarks and copyrights to secure bank financing. These challenges include difficulties in valuating IP assets, the absence of a liquid and transparent secondary market, and the lack of a solid understanding of IP by many lenders and investors.
IP financing and ultimate objective
IP financing serves the unique needs of innovative enterprises – especially small and medium-sized enterprises (SMEs) – that are rich in IP assets but often lack tangible assets to secure bank financing.
The IP Financing Sandbox allows Authorized Institutions (AIs) to test the full lifecycle of an IP financing transaction and accumulate practical experience through real financing transactions.
With support from the other participating stakeholders and feedback from the HKMA, AIs can gain insights on crucial aspects of IP financing – including verifying the validity and enforceability of IP rights, obtaining independent valuation of the IP assets, performing credit risk assessment and credit approval, creating a charge or security interest over the IP assets where appropriate, and fulfilling loan drawdown requests from clients.
The initiative aims to improve access to financing for innovative enterprises with IP assets through promoting awareness of IP assets as a valuable asset class along with collaboration amongst AIs and other stakeholders.
The ultimate objective is to enhance development of an IP trading ecosystem in Hong Kong.
The government and the HKMA will oversee the implementation of the IP Financing Sandbox. The government, through CEDB and IPD, will assess the need for developing a set of local IP valuation guidelines incorporating standards that are acceptable to all stakeholders.
The HKMA will share good practices and consider the need for developing further supervisory guidance on the credit risk management aspect of IP financing.
Hong Kong’s three note-issuing banks are the inaugural participants of the IP Financing Sandbox. They have solicited interest from clients from the biotechnology, electronics and technology sectors to conduct pilot trials through the initiative.
Operating principles of the IP Financing Sandbox
- Recognition of IP value: Participating AIs will take into account the value of IP assets owned by the borrowing enterprises, including but not limited to the fair value as defined in the International Financial Reporting Standards, market value, equitable value/investment value and liquidation value, alongside a host of other relevant factors such as the borrower’s credit demand, overall financial position and repayment ability, in the credit underwriting process.
- Independent IP valuation: IP valuation is expected to be conducted by independent IP valuation service providers who are members of reputable local or overseas professional organisations such as the Hong Kong Institute of Surveyors, the Hong Kong Institute of Certified Public Accountants, CFA Society Hong Kong and the Royal Institute of Chartered Surveyors. These IP valuation service providers are expected to use standardised methodologies for IP valuation such as the income, market or cost approach.
- Risk management: Participating AIs should comply with applicable supervisory requirements on credit risk management and other risk areas, while participating enterprises should comply with the legal and regulatory requirements in respect of maintaining and developing the IP assets concerned.
Links to HKMA press release and circular
Hong Kong Monetary Authority – HKMA, CEDB and IPD launch IP Financing Sandbox
Intellectual Property Financing Sandbox (Annex)
