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Hong Kong Legislative Council member Johnny Ng has recently called for the government to explore regulations governing DAO sector.
Hong Kong Legislative Council member and a well-known Web 3.0 advocate, Johnny Ng, has recently called for the Hong Kong government to explore regulations governing decentralized autonomous organizations (DAOs). This push for a legal framework follows a court ruling that ordered defendants involved in a DAO project to disclose financial records.
The case in question is Mantra DAO, where the plaintiffs accused the defendants of misappropriating assets belonging to the DAO. However, the defendants argued that the ownership of the assets lies with token holders.
The situation raised concerns over a lack of clear regulations surrounding DAOs, which operate without a centralized authority and rely on smart contracts for governance.
During an interview with local media on Monday, Ng noted the need for a clear legal framework for DAOs to clear the city’s way to become a global Web3 hub. He sees the Mantra DAO case as a potential legal precedent for the Web3 industry, with the court’s decision likely to influence future rulings on similar issues.
The market capitalization of Mantra DAO has experienced a decline, standing at $740 million, down from $1.1 billion in late July, according to DefiLlama.
Hong Kong and Crypto
Hong Kong’s relationship with cryptocurrency has seen several ups and downs. The city lost its status as a crypto hub following Mainland China’s ban on crypto trading in 2021. However, in 2022, Hong Kong stated that it is ready to re-engage with the digital asset industry, opening its doors to crypto firms.
The government established a licensing regime for crypto trading platforms by June 2023, allowing approved exchanges to offer retail trading services in the region. However, despite the city’s welcoming stance towards digital assets, crypto companies have reported difficulties in securing banking services.
Ng, a vocal supporter of making Hong Kong a crypto hub, recently stated that the government should ease these banking restrictions on crypto firms. He also suggested the government create a “virtual asset/digital asset bank” or upgrade the banks to be able to manage virtual assets.
Last month, Ng also expressed support for incorporating Bitcoin into Hong Kong’s financial reserves, which stood at around $417.1 billion as of May 2024.
Earlier this year, Hong Kong approved exchange-traded funds (ETFs) for Bitcoin and Ethereum. However, these investment funds have not recorded a notable performance, holding 4.2k BTC units and 14.56k ETH units, according to data from SoSoValue.
As Hong Kong solidifies its position as a crypto leader, the call for clear regulations governing DAOs could be an important step in helping so.
