Calls Mount for UK to Ban Political Donations Made in Crypto

Ali called cryptocurrency donations a vector for “foreign interference in our democracy,” urging ministers to block “the use of cryptocurrencies to funnel money into British politics.”

Ali is one of a number of British MPs who have advocated a blanket ban on crypto donations. In January, seven Select Committee Chairs wrote to the Prime Minister urging for an "explicit provision to disallow cryptocurrency donations," arguing that they leave the UK open to "hostile foreign interference."

Crypto is opaque, hard to trace, vulnerable to foreign interference & a growing risk to democratic integrity.

“Cryptocurrency donations carry huge risks of dirty money and foreign interference, but the Electoral Commission does not currently have the necessary powers to properly regulate these risks,” Spotlight on Corruption Susan Hawlet told Decrypt. She added that it would be “disproportionate” to expect small parties and individual candidates to take on the burden of preventing those risks, “particularly to accommodate a form of finance that is used by just 8% of the population, and whose use is heavily skewed towards high-income individuals.”

“Other jurisdictions like Ireland and Brazil have banned cryptocurrency donations—there is no current public domain evidence that this has caused significant displacement or problems,” Hawley added.

The JCNSS further recommended that the Electoral Commission produce “more comprehensive interim guidance,” requiring parties to only use FCA-registered VASPs, only accept donations with “high confidence” in the ultimate funding source, and prohibiting donations that have been routed through coin mixers.

That doesn’t go far enough, Spotlight on Corruption argued, noting that Electoral Commission guidance isn’t binding unless placed on a statutory footing, so it could not be used to take enforcement action against parties or candidates. The Commission also lacks the powers to police crypto donations effectively due to its “limited information sharing powers” and inability to regulate overseas donors, they added.

The organization called for a “robust new ‘donor declaration,’” requiring the donor to vouch that their funds have not “originated from high-risk crypto donations or donations that have not passed through an FCA-regulated entity.” This, they argued, will “put the onus back on the donor instead of individual candidates and it will be a criminal offense to make a false statement.”