Hong Kong lawmaker proposes DAO regulation to enhance Web3 investments

Hong Kong lawmaker Johnny Ng Kit-chong has urged the government to establish a legal framework for regulating decentralised autonomous organisations (DAOs). 

Ng believes that such regulation would significantly enhance Hong Kong’s attractiveness as a hub for Web3 investments, drawing in both overseas talent and capital. 

His call for regulatory clarity comes in the wake of a recent High Court ruling that has set an important legal precedent for the Web3 sector.

The ruling in question involves the Mantra Chain case, where the High Court ordered the disclosure of financial details concerning Mantra DAO Inc. 

The case arose from a dispute between Mantra DAO Inc. and its infrastructure host, Riodefi, against four former employees accused of misappropriating DAO funds. 

The ex-employees argued that because the DAO has no beneficial owners, they should not be held liable. 

However, the court focused on whether a disclosure order should be issued, emphasising the importance of maintaining the status quo pending trial.

Ng highlighted the significance of this ruling, stating that it demonstrates how Web3 operations are subject to the rule of law. 

He emphasised that this decision sets a crucial legal precedent for the global Web3 ecosystem, underlining the need for a regulatory framework that would provide legal clarity and protection for all parties involved in DAO operations.

Ng also clarified that the Mantra Chain case is a shareholder dispute and has not affected the general public. 

However, he stressed that establishing a legal framework for DAOs would not only solidify Hong Kong’s position as a leader in the Web3 space but also ensure that such disputes are managed within a clear and fair legal structure. 

This move could ultimately boost investor confidence and drive further growth in Hong Kong’s emerging Web3 investment landscape.