Hong Kong Legislator Advocates for DAO Regulations to Boost Web3 Sector

Johnny Ng, a Hong Kong legislator, has proposed that the government introduce regulations for Decentralised Autonomous Organisations (DAOs). Ng believes such a move could strengthen the city’s Web3 investment landscape and attract international talent.

Ng has expressed his hope that by legally regulating DAOs, Hong Kong could enhance its Web3 ecosystem, drawing in more industry players, capital, and talent.

Legal Precedent in Web3 Sector

Ng's proposal comes on the heels of a recent High Court ruling involving Mantra DAO and its infrastructure host, RioDeFi. The court ordered the disclosure of financial details related to Mantra Chain's operations, following a dispute with former RioDeFi employees accused of misappropriating funds and business from the project.

RioDeFi, which was incorporated in Malaysia in 2019, claimed it had hired two of the six defendants to manage the project in 2020. The project's market value was estimated at HK$6 billion ($780 million).

Dispute Over Financial Control

The court ruling requires Mantra DAO to provide its financial spreadsheets and supporting documents to RioDeFi upon request. The defendants had argued that providing payment details would be a daunting task due to limited resources.

They also contended that ownership and control of the project rested with the DAO’s token holders, not the company.

Justice David Lok, who presided over the case, acknowledged the challenges courts face in dealing with disputes related to crypto trading, given the limited global experience in this area.

Implications for Hong Kong's Web3 Future

Ng views this ruling as a significant legal precedent for the Web3 community, not just in Hong Kong but globally. He has been a vocal advocate for establishing Hong Kong as a hub for crypto and Web3 innovation.

In the past, he has encouraged major crypto exchanges like Coinbase to pursue licensing in Hong Kong, signalling his commitment to creating a supportive environment for digital currencies.

Ng has also proposed the inclusion of Bitcoin in Hong Kong's official financial reserves, further emphasising his intent to position the region as a leader in the Web3 space.