MPs demand temporary ban on crypto donations to UK parties

MPs have called for a temporary ban on political parties receiving donations in cryptocurrencies over concerns about foreign interference in British democracy.

Foreign donations are already banned in the UK and the government is planning to tighten up the rules to increase transparency.

But anti-corruption campaigners have warned that crypto donations - which are currently legal - could be used to disguise the source of money.

Parliament's joint committee on the national security strategy has written to the government to demand a temporary halt to crypto donations until tighter regulations can be developed.

Reform UK is currently the only party at Westminster to have received donations in crypto currency.

Reform's website says it does not accept anonymous donations and any donations exceeding £500 are subject to the usual permissibility checks to ensure the money comes from UK-registered companies or individuals on the electoral register.

The party has been contacted for comment.

The national security strategy committee is calling for a "temporary moratorium" until the Electoral Commission produces a set of rules on accepting crypto donations.

In a letter to Communities Secretary Steve Reed, committee chairman Matt Western said guidance should limit parties to only accepting crypto donations where there can be "high confidence" about the ultimate source of the funds.

Western, a Labour MP, said political parties should have to convert the donation to pounds sterling within 48 hours, and called for a ban on donations where the ultimate donor had been obscured.

The proposal follows an inquiry by the committee into political finance and the risk of foreign interference.

MPs on the national security strategy committee say they are concerned that foreign interference could increase up to the next general election.

The worsening security situation, with the ongoing war in Ukraine and tensions between the EU and US, increased "the value of influencing the UK's political positions," Western argues in his letter to Reed.

He also warns that a "corrosive" belief that foreign interference could impact the democratic process presented a "significant risk to long-term trust in institutions".

The committee is also calling for harsher sentences for those breaking laws on political finance, tougher checks on the source of donors' wealth and a specialist police unit focused on foreign interference.

Under the proposals, companies making political donations will have to show they have a genuine connection to the UK, including demonstrating they are headquartered here, majority owned or controlled by UK electors or citizens and have generated sufficient revenue to cover the donation.

The bill does not include a ban on donations in crypto currency.

But campaign groups, such as Spotlight on Corruption, are calling on the government to introduce one during the bill's passage through Parliament.

A review into foreign interference in British politics, led by former senior civil servant Philip Rycroft, includes a focus on crypto and is due to report next month.

The government has been contacted for comment.