A UK parliamentary committee urged the government to impose “an immediate moratorium on crypto donations” until Parliament approves the Electoral Commission’s statutory guidelines.
In a report, the Joint Committee on National Security Strategy said that cryptocurrencies pose an avoidable risk to political finances and public trust. The committee said the rules should be ready before the next general election.
The report noted that the same characteristics that make cryptocurrencies useful for quick payments also make them more difficult to monitor. He points to mixers, tumblers, privacy coins and chain hopping as tools that can blur the origin of funds and warns that AI tools could help split a large payment into many donations of less than 500 pounds ($668), keeping each below the normal reporting threshold.
Cryptocurrency donations remain legal in the country, although crypto assets are treated as property and not legal tender, the report added. Reform UK, the Nigel Farage-led party that leads national polls, is the first European political party to say it will accept crypto donations.
The total value of crypto donations Reform UK has received so far is unclear. Crypto investor Christopher Harborne has donated around $12 million in cash to the party.
Natasha Powell, chief compliance officer at cryptocurrency exchange Kraken, told lawmakers that regulated exchanges can manage much of the danger. Still, the committee was unconvinced, saying the current framework lacks the tools and staff needed to verify donors, track funds and prevent abuse. As such, he wants the moratorium to be included in the People’s Representation Bill.
The report adds that a ban on direct crypto gifts would not close all loopholes. A donor could still convert cryptocurrency into British pounds before sending money through the banking system.
The committee also wants the Electoral Commission to be given powers to demand information from banks, the tax authority and crypto platforms when it suspects impermissible activity, the report added.
Earlier this year, senior Labor members of parliament called on Prime Minister Keir Starmer to ban cryptocurrency donations to political parties, fearing that hostile foreign entities could use them to influence elections.
