Hong Kong lawmaker calls for legal framework to regulate DAOs

A Hong Kong lawmaker has called for a legal framework to regulate DAOs following a court ruling on the decentralized organization.

Hong Kong may begin developing a regulatory framework for decentralized autonomous organizations, with lawmaker Johnny Ng Kit-chong advocating for clearer rules to increase stability in the web3 sector.

Ng, a member of the Legislative Council, believes that establishing a legal framework could benefit the region by attracting international talent and investment, and strengthen Hong Kong’s position in the rapidly developing cryptocurrency world, the South China Morning Post reported.

To promote the development of Web3 and virtual assets in Hong Kong, the HKSAR Legislative Council recently established the Web3 and Virtual Assets Development Sub-Committee. My office aims to gather insights from the global Web3 industry, provide policy recommendations and… pic.twitter.com/836ofG5XCK

— Johnny Ng (@Johnny_nkc) June 22, 2024

This is not the first time Ng has called for regulatory clarity for DAOs. In July, he also called for clear policy and regulatory recommendations for DAOs to be established to “support and regulate the healthy development” of these entities in Hong Kong.

But the latest call comes shortly after the Hong Kong High Court, in what Ng described as a “landmark ruling marking the world’s first DAO judicial review”, ordered six defendants in the Mantra DAO case to disclose financial information over alleged misappropriation of HK$6 billion (approximately $767 million).

“I hope the government can improve the web3 ecology and legally regulate DAOs so that more people in the industry will come to Hong Kong to develop their projects and bring in capital and talent.”

Johnny Ng Kit Chong

Ng has long been a vocal advocate of crypto-friendly regulation in Hong Kong. Earlier in August, crypto.news reported that Ng emphasized that the city should intensify its efforts in the crypto space by expanding virtual banking services, especially as web3 startups continue to face challenges accessing financial services.

Ng noted that “virtual asset policies have become a focal point of global government discussions,” arguing that virtual banks should better meet the needs of web3 companies and accelerate the development of Hong Kong’s digital ecosystem.