UK to Ban Political Parties from Accepting Crypto Donations

The UK government is preparing legislation to prohibit political parties from accepting donations made in cryptocurrency. This move forms part of broader election reforms currently being developed. The ban is likely to directly impact Nigel Farage’s Reform UK, a party that publicly announced last May its intention to accept crypto donations to support a pro-crypto image.

The planned elections legislation will also impose restrictions on donations from shell companies and unincorporated associations. Additionally, it could require political parties to assess the risks of any donations that might lead to foreign interference in UK elections. The government has not denied reports of the crypto donation ban and indicated that it will provide more details in the forthcoming Elections Bill.

Since its founding as the Brexit Party, Reform UK has raised over $26 million according to the donation tracker DonationWatch. It is unclear how much of these funds have come through cryptocurrency. DonationWatch also notes that Christopher Harborne, a shareholder in crypto firms Bitfinex and Tether, has donated more than $13 million to the party, making him the largest personal donor linked to Mr. Farage. Another notable donor is Fiano Cottrell, who has given approximately $975,000. Her son, George Cottrell, an associate of Farage, has a history involving wire fraud convictions and crypto ATM investigations but remains closely involved with Reform UK.

Government ministers have expressed concern about the challenging task of tracing cryptocurrency donations. The Electoral Commission, the UK’s election watchdog, worries about verifying the origin and ownership of crypto donations. The charity Spotlight on Corruption (SP) has recommended that crypto political donations be eliminated to prevent risks associated with hostile foreign interference and unverifiable overseas voters. It also warns about the dangers of third-party donations and crowdfunding that disguise the true source of funds.

SP has suggested imposing limits on donations made with privacy-focused cryptocurrencies—these are digital currencies designed to keep transactions anonymous. They also advise that political donations in crypto should only be accepted through firms approved by the UK’s Financial Conduct Authority (FCA). Currently, Reform UK uses the crypto infrastructure firm Radom for donations. Radom holds a virtual asset service provider license under Europe’s MICA regulations but is not registered with the FCA. Radom promotes its service by highlighting its ease for overseas supporters to donate compared to traditional international fiat transfers.

SP’s executive director stated, “We know that bad actors like Russia use crypto to undermine and interfere in democracies globally, while the difficulties involved in tracing the true source of transactions means that British voters may not know everyone who’s funding the parties they vote for.” This statement reflects ongoing concerns about transparency and security in political financing when involving cryptocurrencies.

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