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Hong Kong lawmaker Johnny Ng has proposed that the government establish a legal framework to regulate decentralized autonomous organizations (DAOs) in order to grow its Web3 industry.
Ng's comments come after the Hong Kong High Court recently ruled on the Mantra DAO, asking six defendants in the project to reveal financial details of the DAO.
Mantra DAO's legal conflict revolves around the ownership, management, and control of the DAO. Attorney Monin Ung highlighted that RioDeFi, the plaintiff, hired personnel to oversee the project in August 2020, but accountability declined by January 2021.
The plaintiff alleges that the defendants misappropriated project assets and made unauthorized withdrawals but the defendants claimed that ownership belongs to the DAO's token holders, not the company.
By ordering the defendants to provide financial information about the project, the court expressed an urgent need for transparency.
Ng regarded this ruling as an important legal precedent for the global Web3 ecosystem, marking the world's first judicial review of a DAO.
“I hope the government can improve the ecology of Web3 and regulate DAOs legally so that more people in the industry will come to Hong Kong to develop their projects and bring in capital and talent,” Ng said.
As part of the plan to position the city as a global fintech hub, Hong Kong is also looking to introduce even stricter crypto regulations in the next 18 months.
Announced at the Foresight Summit 2024, David Chiu shared the plans to implement strong oversight through legislation in his capacity as a member of the Legislative Council of Hong Kong Special Administrative Region, specifically targeting stablecoins.
Perion Lim
“The digital asset industry has made significant progress in the past few years, but we are still in a very early stage. We should establish a sound exchange system and soon introduce legislation related to stablecoins,” said Chiu.
Ng also recently suggested that the Hong Kong government should consider adding Bitcoin to its federal reserves.
"Regarding Bitcoin becoming an official financial reserve for a country or region, I think this is worth considering," Ng said.
"The global acceptance of Bitcoin is constantly increasing, and Bitcoin is seen by the public as "digital gold" in the context of its technology, so in the future, it is indeed possible to research and consider including Bitcoin in strategic financial reserves, as long as it is compliant."
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