DAO Regulations Proposed By HK Lawmaker In $6B Battle

Legislator Johnny Ng of Hong Kong has urged the city government to finalize the legislative framework for decentralized autonomous organizations (DAO) as a critical step towards improving the Web3 investment environment.

As to the newspaper, Ng’s recommendation follows the historic ruling by the Hong Kong High Court, which mandated that a blockchain project worth HK$6 billion reveal its financial documentation. This decision demonstrates the industry’s significance for clear regulations.

Ng suggested that the government might increase investor confidence and attract foreign capital to Hong Kong by enacting clear legislation for decentralized autonomous organizations (DAOs).

Every member of a DAO participates in the decision-making process by casting a vote on the blockchain, which gives its governance a unique and occasionally elusive quality.

Ng said: To encourage more professionals in the field to come to Hong Kong to develop their initiatives and bring in skill and cash, I think the government can strengthen the Web3 ecosystem and legally regulate DAOs. It may play a significant role in the pursuit of economic expansion.

The need for increased regulation is a response to a highly visible legal fight concerning the ownership and management of the MANTRA DAO project. RioDeFi, a Malaysian corporation, was one of the parties involved in the lawsuit, which highlighted the challenges and complexities of running DAOs in the absence of clear legal standards.

According to RioDeFi, who claims to be its founder, the project’s management team allegedly made withdrawals from the Bitcoin account without explaining and failed to disclose accurate information.

Treasury Bureau Monitors Global DAO Regulations

The High Court previously ordered MANTRA DAO to disclose its financial records, emphasizing the legal system’s unfamiliarity with cryptocurrency-related cases. The ruling, issued last week, stated that decentralized autonomous organizations (DAOs) are unique entities but still need proper financial accounting, similar to other businesses.

However, Lawyer Monin Ung warned that DAOs could be vulnerable to abuse without a regulatory framework. She pointed out that some U.S. states are already enforcing regulations on DAOs, including annual financial reporting. She urged Hong Kong to adopt similar measures to ensure financial accountability and investor protection.

The Financial Services and the Treasury Bureau also acknowledged this concern, noting the lack of global consensus on DAO regulation. The bureau closely monitors international developments and confirmed that DAOs involved in regulated financial activities would still need to obtain appropriate licenses and comply with regulatory oversight.

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Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.

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