A Hong Kong lawmaker calls for a legal framework to regulate DAOs following a court ruling on a decentralized organization.

Hong Kong might begin developing a regulatory framework for decentralized autonomous organizations, as lawmaker Johnny Ng Kit-chong advocates for clearer rules to improve stability in the web3 sector.

According to a report from the South China Morning Post, Ng, a member of the Legislative Council, believes that establishing a legal framework could benefit the region by attracting international talent and investment, reinforcing Hong Kong’s position in the rapidly evolving crypto landscape.

It is not the first time Ng has urged regulatory clarity for DAOs. In July, he also publicly called for the creation of clear policy and regulatory recommendations for DAOs to “support and regulate the healthy development” of these entities in Hong Kong.

However, the latest call comes shortly after Hong Kong’s High Court, in what Ng described as a “landmark moment, marking the world’s first judicial examination of a DAO,” ordered six defendants in the Mantra DAO case — alleging misappropriation of HK$6 billion (approximately $767 million) — to disclose financial details.

“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.”

Johnny Ng Kit-chong

Ng has long been a vocal proponent of crypto-friendly regulation in Hong Kong. In early August, crypto.news reported that Ng emphasized the need for the city to intensify its efforts in the crypto space by expanding virtual banking services, particularly as web3 startups continue to face challenges in accessing financial services.

Ng has proposed that virtual banks should better cater to the needs of web3 companies and accelerate the development of Hong Kong’s digital ecosystem, asserting that “virtual asset policies have become the focus of global government discussions.”