British lawmakers of the parliamentary national security committee have called for a temporary ban on political parties receiving donations in cryptocurrency, over concerns about foreign interference in the country’s democracy.
Matt Western, the Chair of the Joint Committee on the National Security Strategy (JCNSS), which monitors the implementation and development of the United Kingdom’s national security strategy, wrote this week to the government urging ministers to temporarily block cryptocurrency donations in political finance.
Foreign donations are already banned in the U.K., but the government is planning to tighten the rules further to account for the novel risk posed by digital assets.
The letter, sent to the Secretary of State for Housing, Communities and Local Government, Steve Reed, suggested that the government introduce a “temporary moratorium on accepting cryptocurrency donations until the Electoral Commission produces statutory guidance.”
The recommendation follows an inquiry launched by the JCNSS into the risks of foreign interference in the U.K.’s political finance system. The inquiry, titled “Defending Democracy,” held a series of evidence sessions, hearing from a range of witnesses, including journalists, civil society groups, crypto industry representatives, and law enforcement.
According to Western, during the sessions, competing arguments about the appropriateness of allowing political donations to be made using cryptoassets were voiced. Some speakers supported a ban on digital asset donations and suggested that allowing them is “unnecessarily risky,” while others, such as Natasha Powell, Chief Compliance Officer at digital asset exchange Kraken, argued that a ban would simply force people to go offshore to circumvent the rules.
“They will keep happening; they will just do so under the radar,” Powell told the Committee. “If you enable U.K. individuals to make political donations to U.K. political parties through U.K.-regulated institutions, you will create a safe and legitimate means of doing so.”
Similarly, Tom Keatinge, Director of the Centre for Finance and Security at think tank Royal United Services Institute (RUSI), told the Committee that banning digital asset donations “risks missing the wood for the trees.” He called instead for a “moratorium until such time as we are sure that we have the right checks and balances in place.”
This latter point was backed by the JCNSS in its recommendations to the government.
On top of the moratorium, the other key digital asset-related suggestions called for in Western’s letter included that political parties only use Virtual Asset Service Providers (VASPs) which are registered with the Financial Conduct Authority (FCA); only accept donations where there can be high confidence in the identity of the source of funds, a ban on donations where there has been the use of crypto mixers or tumblers which obscure the source of funds, and that parties convert the value of the donation to pound sterling within 48 hours of receipt.
Beyond digital assets, the JCNSS had a number of other proposals for upcoming legislation, such as the creation of “a single national police lead for political finance, with a specific emphasis on foreign interference risks,” in the form of a joint unit that “draws on existing specialist capabilities.”
Other recommendations included tougher sentences for criminal breaches of political finance law relating to foreign money, which would also enable law enforcement to deploy more intrusive investigatory powers, and stronger powers for the Electoral Commission to compel financial institutions to provide information relating to the source of donation funds.
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Electoral reform bill
The JCNSS letter was framed in the context of the government’s recent introduction of the ‘Representation of the People Bill,’ which proposes a number of electoral reform measures, including addressing foreign actors using money to interfere in the U.K.’s elections, and expanding voting rights to 16- and 17-year-olds.
“The Representation of the People Bill will protect our democracy against foreign interference,” said Reed MP, when the bill was launched on February 12. “These reforms will end the status quo, where a new company registered today, owned by anyone, funded from anywhere, without even a single day of trade, can donate and have influence in UK politics.”
He added that the proposed reforms “will also be informed by the findings of the Rycroft Review, which is exploring how we can go even further to tackle illicit money entering our politics from abroad, including cryptocurrencies.”
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Call for an end to political digital currency donations
Foreign interference in U.K. elections has been a growing concern in the country for some time. In 2022, U.S. intelligence reports alleged Russia had spent more than $300 million on influencing elections around the world, including in the U.K.
In parallel, the continued growth of the digital asset space over the past decade or more has exacerbated fears of interference, due to cryptocurrency’s inherent pseudoanonymity being able to potentially mask the source of donations.
Pressure on the U.K. government to address this perceived weakness has intensified in the light of bans in other countries, such as Ireland, Brazil, and several states in the U.S.—for example, a cap of $100 on digital currency donations in the state of Washington.
On top of this, the rise of crypto-advocate and Trump supporter Nigel Farage and his right-wing Reform U.K. party has seen an increased focus on cryptocurrency donations in recent months.
In 2025, Reform UK became the first U.K. political party to accept donations in digital currency. This was followed in December by the revelation that the party had received a £9 million ($12.12 million) donation from Christopher Harborne, a leading cryptocurrency investor.
Farage himself has also previously admitted to holding some long-term digital assets, telling a conference in London that he was the “only hope” for the U.K. digital currency industry.
Outside of fears of foreign interference, Reform’s dramatic rise—going from a fringe curiosity with 1% vote share in 2020 to a leading political player in the U.K. polling at 29% in May 2025—serves as a major motivator for the traditional political duopoly of the Conservatives and Labour to take action on digital asset donations.
In other words, the opportunity to either cut off or divert potential crypto donations to Reform UK has become more of a priority for the incumbent than ever.
This has all led to increased activity from lawmakers, seen earlier this year when seven MPs wrote to Prime Minister Keir Starmer, urging the inclusion of a ban in the then-upcoming election bill. Western was among the signees, who also included Liam Byrne, Emily Thornberry, Tan Dhesi, Florence Eshalomi, Andy Slaughter, and Chi Onwurah—all chairs of different parliamentary committees.
In a January 12 post on X, Byrne MP said that “Crypto is opaque, hard to trace, vulnerable to foreign interference and a growing risk to democratic integrity.” He added that the letter aimed to make sure that “this loophole will be closed.”
In terms of specific concerns, the seven MPs gave five reasons why digital asset donations should be banned, including that “techniques such as the use of crowd-funding platforms, privacy coins, mixers, coin-swap services, and chain-hopping can obscure the identities of the individuals behind transactions and make them almost impossible to trace.”
They particularly highlighted the danger that this anonymity could leave the U.K. open to hostile foreign political interference.
“We do not believe it is prudent or wise to allow a known risk to the integrity of political finance to continue,” argued the MPs.
Tuesday’s letter from the JCNSS piles further pressure on the government’s ‘Representation of the People Bill’ to deliver on such concerns about foreign interference and cryptocurrency donations.
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Watch: What’s ahead for crypto regulation? Highlights from Blockchain Futurist Conference 2025
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Source: https://coingeek.com/uk-mps-seek-temporary-freeze-on-crypto-political-donations/
