Crypto Donations to UK Political Parties to Be Banned
Donations made in cryptocurrency to UK political parties will be prohibited, Prime Minister Sir Keir Starmer announced, following a review addressing foreign financial interference risks.
Additionally, ministers are implementing a cap on donations from British citizens residing abroad, limiting contributions to £100,000 annually. This measure is among 17 recommendations proposed by former senior civil servant Philip Rycroft.
The UK government is currently evaluating its response to the remaining proposals from Rycroft's review, which also includes a ban on foreign-funded online political advertisements.
The Rycroft review was commissioned last year as a response to threats posed by foreign states attempting to interfere in British democratic processes.
This initiative followed several high-profile incidents of foreign interference in UK politics, notably the conviction of former Reform UK Member of the European Parliament Nathan Gill for accepting bribes to promote pro-Russian narratives.
The recommendation to ban cryptoasset donations is particularly pertinent to Reform UK, which remains the only Westminster party known to have accepted donations in digital currency.
In May of the previous year, Reform UK leader Nigel Farage declared that the party would accept Bitcoin donations, a form of cryptocurrency.
By October, Farage stated that the party had already received a "couple" of crypto donations.
Reform UK's official website states that it does not accept anonymous donations and that any contributions exceeding £500 are subject to verification.
In the UK, political parties are required to verify that donations over £500 originate from permissible sources, which include individuals listed on the UK electoral register.
An Electoral Commission spokesperson commented:
"To date, no parties have reported cryptoasset donations to the Commission."
In an article published by the Observer, a spokesperson for Reform UK explained that all crypto donations "are converted into cash by a regulated third party [ that] does this for us".
"Reform itself has no wallet,"the spokesperson added.
"The party meets all its legal responsibilities."
The BBC has requested further comment from Reform UK.
Concerns Over Anonymity and Illicit Funding
Housing Secretary Steve Reed addressed MPs, affirming his acceptance of Rycroft's assessment that the anonymity inherent in cryptocurrency transactions could facilitate the concealment of donation origins and hinder thorough verification of fund sources.
"The clear route that this creates for the illicit channelling of money into our politics is unacceptable and undermines public confidence in our electoral system,"Reed stated.
He noted that the ban on crypto donations would remain effective until both the Electoral Commission and Parliament are satisfied that adequate regulations are established.
Reed further explained that the temporary ban would be applied retrospectively to all crypto donations of any amount from the date legislation is amended.
In addition, Reed announced immediate measures to cap donations from British citizens living overseas at £100,000 per year, consistent with Rycroft's recommendations.
Political parties will have 30 days to return any such donations received before the rules come into effect, after which criminal penalties will be enforced.
This cap will apply to donations in all UK elections, including the forthcoming English local elections, Scottish Parliament elections, and Senedd elections.
Reed confirmed plans to amend the government's Representation of the People Bill to incorporate these two recommendations.
Record Crypto Donation and Foreign Influence Risks
Recent Electoral Commission data reveals that Reform UK received a record £9 million donation from Christopher Harborne, a cryptocurrency investor and aviation entrepreneur.
This contribution represents the largest single donation ever made by a living individual to a British political party.
Harborne, a British national residing in Thailand, has previously donated substantial sums to the Conservative Party during Boris Johnson's leadership, as well as to Reform UK's predecessor, the Brexit Party, in 2019 and 2020.
The Rycroft review emphasizes its focus on the risks foreign money poses to UK democracy.
It references the cases of Nathan Gill and the MI5 alert concerning Christine Lee as examples where the public has been informed about techniques used for interference.
The report states:
"It is clear that foreign interference in our politics is real and persistent."
During Prime Minister's Questions, Sir Keir affirmed the government's commitment to decisive action to safeguard democracy based on Rycroft's recommendations.
