A UK parliamentary committee has urged the government to impose “an immediate moratorium on crypto donations” until Parliament approves statutory guidance from the Electoral Commission.
In a report, the Joint Committee on National Security Strategy said crypto poses an avoidable risk to political funding and public trust. The committee said the rules should be ready before the next general election.
The report notes that the same characteristics that make crypto useful for fast payments also make it more difficult to monitor. It names mixers, tumblers, privy coins and channel jumping as tools that could confuse the source of funds and warns that artificial intelligence tools could help split a large payment into multiple donations of less than 500 pounds ($668), each below the normal reporting threshold.
Cryptocurrency donations remain legal in the country, although cryptoassets are treated as property rather than legal tender, the report added. Reform UK, the party led by Nigel Farage and leading national polls, is the first European political party to declare that it will accept crypto donations.
The total value of crypto donations Reform UK has received so far is unclear. Crypto investor Christopher Harbone donated around $12 million in cash to the party.
Natasha Powell, head of compliance at crypto exchange Kraken, told lawmakers that regulated exchanges can handle much of the danger. However, the committee is not convinced and believes that the current framework does not have the tools and personnel necessary to vet donors, trace funds and prevent abuse. As such, he wants the moratorium to be included in the Representation of the People Bill.
The report adds that a ban on direct crypto gifts would not close all the loopholes. A donor can always cash out cryptocurrencies into British pounds before sending money through the banking system.
The committee also wants the Electoral Commission to be given the power to demand information from banks, tax authorities and crypto platforms when it suspects illegal activity, the report adds.
Senior Labor MPs called on Prime Minister Keir Starmer earlier this year to ban cryptocurrency donations to political parties, fearing they could be used by hostile foreign entities to influence elections.
