Why the Government should ban crypto donations to political parties
Cryptocurrency donations to political parties represent an unnecessary and avoidable risk to the integrity of UK democracy. And that risk is no longer theoretical. According to recent media reports, the first-ever crypto donation to a UK political party was made in November, alongside revelations earlier this month of the largest ever contribution to a political party by a living donor made by a crypto tycoon. This marks a watershed moment in political finance – one that demands a clear response from MPs and policymakers.
The Government has a straightforward choice. It can either acknowledge the unique risks that crypto donations pose to democratic integrity, or allow a new and poorly regulated channel for political money to embed itself in the UK system. The upcoming Elections Bill represents a prime opportunity to make that choice.
This is not about overstating the power of crypto, nor about presenting a ban as a cure-all for the UK’s long-standing problems with money in politics. It is about recognising a clear vulnerability of malign actors from home and abroad wielding their influence on our democracy – one that the Government itself has repeatedly warned about.
That’s why we at the UK Anti-Corruption Coalition – as the UK’s leading anti-corruption experts – are calling for a ban on all crypto donations to political parties as a first step to these problems.
A loophole that weakens existing safeguards
Voters should be able to see who is funding politics, and donations must come from permissible sources. However as we have seen in recent political financing scandals in Spain and Czechia, cryptocurrency donations present a unique risk to both of these principles vital to upholding our democracy. Cryptoassets are designed to facilitate rapid, borderless transfers and many are constructed with the specific intent to obscure ownership.
The underlying system itself is also less transparent than it sounds. While transactions are recorded on public blockchains, they are typically linked only to wallet addresses, not real-world identities. This makes it challenging for enforcement agencies, the Electoral Commission and the public to determine who is truly behind a donation, whether funds originate in the UK, or whether they have passed through high-risk jurisdictions or illicit sources along the way.
Even where political parties attempt due diligence, they are being asked to police a system that was never designed for transparency or accountability in political finance and is evolving at speed. Notwithstanding action against traditional payment businesses, FCA enforcement against firms enabling customers to buy cryptocurrencies suggests some companies lack adequate due diligence and capabilities to manage money laundering risks effectively. As researchers have warned, this creates a structural enforcement gap — leaving parties exposed, regulators constrained, and the public unable to have confidence that the rules are being meaningfully upheld.
UK political parties are not required to conduct due diligence or report on individual donations of less than £500. This leaves our democracy particularly vulnerable to the practice of ‘smurfing’ where larger crypto transactions can be fragmented into small amounts using multiple crypto wallets that can be extremely difficult to trace.
At odds with the Government’s own warnings
The Government has been explicit about the threats facing UK democracy, including with a newly announced review into foreign interference. Ministers have clearly acknowledged the real and persistent threat that foreign interference, illicit finance, and hostile actors seeking to exploit openness in political systems pose to our democracy. Yet permitting political donations via cryptoassets sits uneasily alongside those warnings.
Crypto donations offer a ready-made mechanism for obfuscation in a system that depends on clarity. They increase the risk that impermissible funds could enter UK politics undetected, or only be identified long after the fact. This does not mean that all crypto donations are illicit, but it does mean they introduce a level of risk that is disproportionate to any benefit they offer to democratic participation.
Against that backdrop, continued inaction is difficult to justify, particularly when the Government has repeatedly emphasised the need to strengthen, rather than weaken, electoral safeguards.
A clear choice in the Elections Bill
The forthcoming Elections Bill provides a golden opportunity to act. A clear ban on crypto donations would give certainty to political parties, clarity to regulators, and reassurance to voters that basic democratic safeguards are being taken seriously.
This would not be a silver bullet – there are still plenty of gaps in our political financing regime such as big money in politics and high transparency thresholds. But it would be a proportionate, sensible reform, and a clear signal that the Government understands that defending democracy sometimes begins with removing the most obvious vulnerabilities.
Closing this loophole would reduce exposure to abuse, simplify compliance for political parties, and strengthen public confidence – without restricting legitimate political engagement or fundraising.
If ministers are serious about protecting the UK’s political system from malign interference, banning crypto donations should be the place they start.