Hong Kong Lawmaker Calls for Legal Framework to Regulate DAOs

In an effort to improve the Web3 investment climate in the area, Hong Kong lawmaker Johnny Ng Kit-chong is advocating for a legislative framework to control decentralized autonomous organizations (DAOs). Ng stressed the need for clear laws to draw more talent and capital to Hong Kong’s expanding Web3 sector, citing a recent decision from the High Court.

Mantra Chain Case Highlights Legal Challenges

In response to a recent court dispute involving Mantra DAO Inc. and Riodefi, its infrastructure host, calls for regulatory control have been made. In order to preserve transparency while the trial is ongoing, the Hong Kong High Court mandated that Mantra Chain’s financial records be made public. This decision resulted from a lawsuit that Mantra DAO Inc. and Riodefi filed against four former workers of Riodefi for allegedly stealing money from the DAO. The DAO has no beneficial owners, so the defendants claimed, thus they shouldn’t be held liable.

Ng noted that the court’s decision underscores the applicability of the rule of law to Web3 operations. “The court focused on whether a disclosure order should be issued, not on the merits of the claims,” Ng stated. He believes this ruling sets a significant legal precedent for the global Web3 ecosystem, though he clarified that the case involves a shareholder dispute and does not directly affect the public.

Ng’s proposal for a DAO regulatory framework seeks to guarantee investor protection and legal certainty in order to establish Hong Kong as a pioneer in the Web3 industry. Ng thinks Hong Kong may become a center for Web3 innovation and attract a lot of attention from abroad by tackling these issues.