HONG KONG SAR, CHINA Law and Practice Contributed by: Pang Lee, Joyce Wang, Mark Liang and Francis Li, Cooley
asset value chain under the direct supervision of the Securities and Futures Commission (SFC). Additional- ly, the impending implementation of the Crypto-Asset Reporting Framework (CARF) of the Organisation for Economic Co-operation and Development (OECD) in 2026 will mandate exhaustive transaction-level tax reporting for service providers, significantly increas- ing compliance burdens. The interaction between blockchain business and existing intellectual property (IP) laws has become increasingly harmonised, driven by proactive govern- mental policy. In his 2025 Policy Address, the Chief Executive of HKSAR unveiled strategic measures to transform Hong Kong into a premier regional IP trading hub, central to which is the IP financing sandbox (see 1.1.2 Regulatory Sandbox ). Within the blockchain sector, this facilitates the on-chain tokenisation of IP rights and the embedding of complex licensing logic directly into smart contracts. The jurisdiction’s robust common-law foundation supports these innovations, potentially allowing creators to denominate royalties in regulated fiat-referenced stablecoins (FRS) and auto- mate revenue-sharing distributions while navigating the complexities of legacy IP doctrines. 1.1.2 Regulatory Sandbox Hong Kong operates multiple, highly sophisticated regulatory sandboxes specifically geared towards blockchain-based projects, reflecting a co-ordinated and progressive effort among its primary financial regulators to foster innovation without compromising systemic stability. SFC Regulatory Sandbox Launched 19 September 2017, to provide a con- fined regulatory environment, the SFC expects virtual asset trading platform (VATP) operators to enter this Sandbox and be closely monitored before advanced financial technology is deployed on a fuller scale. The regulator explicitly notes that the Sandbox does not serve as a means to circumvent applicable laws or compromise investor protection requirements. The HKMA Fintech Supervisory Sandbox (FSS) Originally launched in September 2016, this environ- ment allows authorised banking institutions and their partnering technology firms to conduct pilot trials of
blockchain initiatives with a limited number of partici- pating customers, operating under adapted supervi- sory requirements. Over the years, the FSS has under- gone significant upgrades to expand its utility. FSS 2.0, introduced in 2017, added a Fintech Super- visory Chatroom, allowed direct access for tech firms, and linked the HKMA sandbox with those of the SFC and the Insurance Authority (IA) for cross-sector tri- als. FSS 3.0, launched in November 2021, provided funding support of up to HKD1 million for eligible pro- jects. Most recently, the FSS 3.1 Pilot (launched in October 2022 and expanded in November 2024 in collaboration with Cyberport) offers subsidies for pro- jects addressing specific banking industry pain points such as central bank digital currency and interbank account data sharing. As of the end of March 2026, 388 fintech initiatives have been allowed pilot trials within the FSS. The HKMA Stablecoin Issuer Sandbox Launched on 12 March 2024, this specialised Sand- box facilitates two-way communication between the central bank of Hong Kong and prospective stablecoin issuers regarding proposed regulatory requirements and operational plans. On 10 April 2026, the HKMA granted the jurisdiction’s first historic stablecoin issuer licences to Sandbox participants Anchorpoint Finan- cial and HSBC. Project Ensemble Sandbox Co-led by the HKMA and the SFC, this ambitious ini- tiative is designed to build and scale a tokenisation market in Hong Kong, testing the full product cycle from on-chain primary issuance to secondary market trading and hypothecation. In November 2025, the ini- tiative advanced into the Ensemble pilot phase. This phase facilitates the interbank settlement of tokenised deposits and RWAs directly via the local real-time gross settlement (RTGS) system, designed to signifi- cantly reduce the settlement delays and counterparty risks inherent in the legacy banking infrastructure. IP Financing Sandbox Officially launched on 22 December 2025 by the HKMA in collaboration with the Commerce and Eco- nomic Development Bureau (CEDB), this Sandbox specifically targets the technology sector, creating a
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