UK Minister Calls for Crypto Donation Review Amid Foreign Influence Fears

UK Cabinet Office Minister Pat McFadden has called for a review of political donations made in cryptocurrencies, citing concerns over foreign influence and the challenges of tracing such donations. McFadden's remarks come in the wake of Nigel Farage's announcement that his Reform UK party would become the first British political group to accept Bitcoin donations, a move that echoes similar actions by Donald Trump’s 2024 campaign.

Campaigners, including Spotlight on Corruption, have warned that unregulated crypto donations could enable covert foreign interference, potentially undermining democratic processes. During a joint Commons and Lords committee session on national security, Labour MP Liam Byrne pressed McFadden on the issue, highlighting the need for transparency and legislative updates to protect the integrity of political funding.

Both McFadden and Byrne agreed that strengthening resources for the Electoral Commission and the National Crime Agency is crucial for better policing of political finances. Byrne described current party finance rules as favoring opacity, calling for bans on crypto donations and foreign money, alongside enhanced enforcement. Further concerns were raised about donations from “unlimited companies,” whose financial records are difficult to scrutinize.

While McFadden’s comments indicate a willingness to consider tighter controls on crypto donations, government sources suggest that upcoming election reform proposals may not include an outright ban. Instead, the forthcoming strategy paper is expected to tighten general foreign interference rules, extend them to digital currencies, and promote voter registration reforms, such as lowering the voting age to 16 and protecting candidates from abuse.

Transparency campaigners remain cautious, fearing that the government may avoid capping donations or restoring the Electoral Commission’s criminal investigation powers. As calls for stronger donation checks grow, including from peer Margaret Hodge and democracy advocate Tom Brake, the debate continues over how to safeguard UK democracy against evolving threats in the digital era.

In a related development, the UK will require crypto firms to collect and report detailed customer information on every trade and transfer starting January 1, 2026. This move is part of a broader effort to strengthen tax compliance and oversight in the digital asset sector. According to a recent statement, the new rules will mandate that platforms record full names, home addresses, and tax identification numbers for all users. Each transaction must also be logged with specifics such as the cryptocurrency used and the amount transferred. The reporting obligation extends beyond individual users to include companies, trusts, and charities engaged in crypto activity. Firms that fail to comply or submit inaccurate data may face penalties of up to £300 per user.