UK Political Leaders Push for Crypto Donations Ban Amid Concerns Over Foreign Influence

Seven senior Labour MPs who chair parliamentary committees have called on the UK government to introduce a full ban on political donations made in cryptocurrency. They argue that such donations pose risks to transparency and integrity of the UK's electoral system. The call for action comes ahead of the publication of the upcoming elections bill, which is expected to include measures to address loopholes in political finance.

Liam Byrne, one of the committee chairs, emphasized that political finance must be transparent, traceable, and enforceable. He noted that cryptocurrency transactions can obscure the true source of funds and enable micro donations that fly under disclosure thresholds. Byrne and his colleagues have urged the government to act proactively rather than wait for a potential scandal.

The government has been reviewing the risks associated with crypto donations, with officials acknowledging that foreign influence is a key concern. However, they have also noted the complexities involved in implementing a ban before the elections bill, which is scheduled for publication shortly. Reform UK, a political party that has accepted crypto donations this year, is likely to be impacted by the proposed ban.

Campaign groups and experts have echoed the concerns raised by the MPs. Susan Hawley, executive director of Spotlight on Corruption, said the government should introduce a criminal offense to prevent foreign money from influencing UK politics. She emphasized the need for better resourcing of law enforcement to investigate such cases.

Why Did This Happen?

The push for a ban has intensified due to the potential for foreign states to exploit cryptocurrency's anonymity. The UK Anti-Corruption Coalition has also called for a ban, warning that crypto donations could facilitate rapid and borderless transfers. The coalition argues that such donations are difficult to trace and can obscure the true source of funds.

Philip Brickell MP, chair of the All-Party Parliamentary Group on Anti-Corruption and Responsible Tax, stated that the nature of cryptocurrency makes it unsuitable for political donations. He highlighted the potential for larger donations to be broken down to avoid scrutiny.

What Are Analysts Watching Next?

Analysts are closely watching the government's response to the proposals. The government has indicated that it is considering a ban but has not yet included it in the upcoming elections bill. A review led by former senior civil servant Philip Rycroft is expected to conclude in March and may influence the final decision.

Reform UK has already begun accepting crypto donations and has set up a dedicated portal. The proposed ban could significantly impact the party's fundraising strategy. Liam Byrne has stated that if the elections bill does not include the ban, he will push for amendments to ensure it does.

The UK's regulatory landscape for cryptocurrencies is also evolving. HM Treasury published the final draft of the statutory instrument that will regulate cryptoasset activities in the UK. The new regime is set to come into force on October 25, 2027. The introduction of a new regulatory framework for cryptoassets could have broader implications for how political donations are handled in the future.