UK committee pushes for political crypto donation ban over foreign influence risks

UK lawmakers are raising concerns over the risks tied to crypto donations, which they claim can open the door to foreign influence in political financing.

Summary

• UK parliamentary committee calls for an immediate ban on crypto donations to political parties, citing risks of foreign influence and gaps in oversight.
• Lawmakers warn that tools such as mixers and AI-driven micro-donations could obscure fund origins and bypass existing reporting thresholds.
• Experts remain divided, with some pointing to transparency within regulated systems while others caution that a ban may push activity offshore without resolving core risks.

In its latest report, the Joint Committee on the National Security Strategy urged a moratorium on crypto donations to political parties.

According to the committee, such contributions pose an “unnecessary and unacceptably high risk to the integrity of the political finance system.”

They argued that the government should amend the Representation of the People Bill, which entered committee stage on Wednesday, to prohibit such donations until stronger safeguards are in place. The committee called for an immediate ban on crypto-based political funding.

“Few things are more important than maintaining trust in our politics. The pervasive idea that politicians can be ‘bought’ through foreign money is increasingly corrosive,” Chair of the Joint Committee on the National Security Strategy, Matt Western MP, said.

The report discussed how crypto tools such as mixers, privacy coins, and cross-chain swaps can obscure the origin of funds. Meanwhile, it raised concerns over how AI could enable automated “micro-donations” that allow large contributions to be split into smaller transfers that fall below the reporting threshold under existing electoral law.

Experts consulted by the committee have argued that crypto transactions can remain transparent within regulated systems, while others have warned that a blanket ban could push activity offshore without addressing the underlying risks.

However, the committee report concluded that the “opportunity to evade rules is too high” under current oversight.

Regulatory pressure grows

Last month, some Members of Parliament in the United Kingdom, led by Matt Western, sent a letter to the Secretary of State for Housing, Communities and Local Government, Steve Reed, where it raised similar concerns around foreign interference risks.

The letter urged the Electoral Commission to introduce interim safeguards by only allowing political parties to process crypto donations through FCA-registered Virtual Asset Service Providers and ensuring there is high confidence in identifying the ultimate source of funds.

Among other suggestions, lawmakers proposed prohibiting the use of crypto mixers or tumblers, alongside stricter source-of-wealth checks and faster conversion of donations into pounds sterling.

According to a BBC report, Reform UK was among the first parties at Westminster to accept crypto donations. However, details on the party’s official website state that it does not accept anonymous donations and applies standard compliance checks to verify donor eligibility.