Update: IP and licensing for a technology group expanding into Asia

Technology groups moving into Asian markets face a structural question before they sign a single licensing agreement: which jurisdiction holds and controls the intellectual property, and what does that choice cost them when enforcement becomes necessary? The answer is more consequential than most foreign principals expect.

For technology groups expanding into Asia, Hong Kong operates as the preferred holding and licensing hub under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and the Securities and Futures Ordinance, with the Securities and Futures Commission acting as the principal licensing authority for any digital or virtual-asset component of the product stack. The structural and regulatory exposure crystallises at entry – before the first licence is signed.

This briefing sets out what changed, who it affects, and the steps to take now.

What Has Changed and Why Timing Matters

The virtual-asset trading platform licensing regime, which commenced 1 June 2023, extended mandatory licensing obligations to centralised platforms handling virtual assets in Hong Kong. Where a technology group's product touches a virtual asset that qualifies as a "security" or "futures contract" under the Securities and Futures Ordinance, a second licensing layer applies in parallel.

More recently, the Hong Kong Monetary Authority moved to introduce a licensing regime for fiat-referenced stablecoin issuers, with commencement in 2025 – parties should verify the current commencement date and perimeter before relying on this position. Together, these developments mean that the IP and licensing posture of a technology group is no longer a purely contractual question. It is a regulatory one.

In our cross-border practice, we see foreign principals arrive with a licensing structure built for their home jurisdiction – typically a European or North American IP holding entity – with no adjustment for the Hong Kong regulatory perimeter. The gap between those two structures is where exposure sits.

The governing question is not simply who owns the IP. It is whether the exploitation of that IP in or through Hong Kong triggers a licensing obligation, a customer due-diligence requirement under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, or both. For groups with a data-heavy or platform product, the answer is frequently yes on at least one count.

Who Is Affected Across the Corridor

The exposure is not limited to groups building consumer-facing platforms. It extends to any technology group that licences its IP to a Mainland China counterparty, operates a software-as-a-service model with end users across the Greater Bay Area, or holds virtual-asset infrastructure – even where the product is positioned as a pure utility.

Three categories of principal should review their position now. First, groups with an IP holding entity outside Hong Kong that licences into the region: the licensing chain needs to be mapped against the regulatory perimeter, not just the tax position. Second, groups with any virtual-asset component in the product stack: the Securities and Futures Commission's oversight applies from the point the asset meets the definition in the Securities and Futures Ordinance, regardless of how the group characterises it internally. Third, groups relying on a cross-border data or SaaS agreement touching the Mainland: the interface between the licensing posture and the data-governance requirements of the Mainland adds a layer that the licensing agreement alone does not address. Our guide on cross-border SaaS and data agreements touching the Mainland sets out the key issues.

AML obligations follow the licensing structure. VATPs are subject to customer due diligence and the FATF travel rule (the Financial Action Task Force requirement that originating and beneficiary institution information travels with virtual-asset transfers). A group that has not mapped its licensing chain against these obligations is carrying undocumented compliance risk.

Immediate Actions

Three steps should happen before any new licensing agreement is executed or any existing structure is extended into the region.

First, map the IP holding and licensing chain against the Securities and Futures Commission's regulatory perimeter and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The map should identify every point at which a licence, a data flow, or a virtual-asset transfer crosses the Hong Kong regulatory boundary.

Second, review the counterparty and source-of-funds position for any Mainland-facing licence. The compliance file needs to reflect the AML posture before the agreement is signed, not after a query is raised. Our matter note on token issuance reviewed under Hong Kong's regime illustrates how this analysis runs in practice.

Third, consider whether the IP holding entity should sit in Hong Kong rather than the current offshore or home-jurisdiction vehicle. The two-tier profits tax regime – 8.25% on the first HK$2,000,000 of assessable profits, 16.5% above – combined with no capital gains tax and no withholding tax on dividends or interest, makes Hong Kong structurally competitive for an IP holding function. The decision should be made before the group commits to a licensing structure, not after the agreements are in place.

Our Tech & Web3 practice covers the full range of licensing, regulatory and structuring questions for technology groups entering the Hong Kong and Greater China market.

The sequence above describes the standard position. Your matter turns on the documents, the jurisdictions actually engaged, and the order of steps – which is where the route is won or lost. For a structured assessment of your IP and licensing position across the relevant jurisdictions, write to us at info@lockhartyip.com.

Speak with Lockhart & Yip

For a scoped view of your matter, contact info@lockhartyip.com. Discuss your matter →

Related

• Tech Web3
• Cross Border Saas Or Data Agreement Touching Mainland 4
• Token Issuance Reviewed Under Hong Kong S Regime 4

This publication is general information and does not constitute legal advice. For advice on your situation, contact info@lockhartyip.com.