The UK stands on the verge of banning crypto donations to political parties amid widespread opposition from the nation’s senior lawmakers. Seven senior committee chairs have published an open letter during the early hours on Monday, stating their disagreement with political parties receiving crypto donations.
The lawmakers argue that as crypto becomes more mainstream, election laws need to keep pace to protect trust in British democracy.
Labour MPs urge Starmer to ban crypto donations
Senior Labour MPs are pressing Prime Minister Keir Starmer to ban crypto donations to political parties, warning that digital assets could open the door to hidden foreign influence in UK elections.
In an open letter, seven senior committee chairs said crypto’s opaque nature makes it harder to know who is really behind political donations.
They argued that crypto’s discrete nature creates risks that hostile overseas actors could quietly interfere in democratic processes.
The group, which includes high-profile figures like Liam Byrne, Emily Thornberry and Matt Western, wants the government to spell out a clear ban in the upcoming elections bill.
They say that crypto presents a growing threat because of traceability difficulties and because foreign powers may intervene in British politics.
“Crypto is opaque, hard to trace, vulnerable to foreign interference & a growing risk to democratic integrity,” Liam Byrne, a British politician, commented. “We should make clear NOW this loophole will be closed.”
UK MP’s open letter takes support from 2022 research
The letter cites a 2022 U.S. Department of State intelligence report alleging Russia spent over $300 million “influencing and interfering in elections across the world, including direct payments to political parties, candidates, and officials, using cryptocurrency as one of its tools.”
In theory, U.K. political parties can at present accept crypto donations as long as they play by the same rules that apply to cash or bank transfers.
Donors have to be eligible, and parties are supposed to check where the money is coming from. In reality, though, crypto has barely made a dent in political fundraising.
Out of the many registered parties in the U.K., only three have ever confirmed taking donations in cryptocurrency.
Most political funding still comes through traditional channels. The Electoral Commission shows that parties raised more than £24 million (around $32 million) in the third quarter of last year, but it doesn’t say how those donations were made, so it’s unclear whether any involved digital assets.
Reform U.K. is the most visible party open to crypto donations and has acknowledged receiving at least one.
Even so, its biggest contributions haven’t relied on crypto. High-profile crypto investor Christopher Harborne donated £9 million ($12.1 million) to the party late last year, but he did so using conventional money, not digital tokens.
Byrne’s open letter not the first jibe at crypto
Liam Byrne has been sounding the alarm on crypto donations for a while now. Back in July last year, he used an opinion piece in The Guardian to warn that digital asset donations could open the door to serious abuse in British politics.
Byrne argued that crypto’s anonymous and borderless nature makes it more difficult to trace whose money is involved, increasing the risk of concealed foreign influence.
He had called on the Labour Party to act quickly and shut down what he saw as a growing loophole in election funding rules. His latest push shows this isn’t a new concern for him, but an issue he’s been consistently pressing as crypto becomes more mainstream.