A U.K. parliamentary committee urged the government to impose “an immediate moratorium on crypto donations” until Parliament approves Electoral Commission statutory guidance.
In a report, the Joint Committee on the National Security Strategy said crypto poses an avoidable risk to political finance and public trust. The committee said rules should be ready before the next general election.
The reportnoted that the same traits that make crypto useful for fast payments also make it harder to monitor. It points to mixers, tumblers, privacy coins and chain hopping as tools that can blur the source of funds and warns that artificial intelligence tools could help split a large payment into many sub-500-pound ($668) donations, keeping each below the normal reporting threshold.
Crypto donations remain legal in the country, even though cryptoassets are treated as property rather than legal tender, the report adds. Reform UK, the party led by Nigel Farage that leads in national polls, is the first European political party to say it will accept crypto donations.
The total value of crypto donations Reform UK has received so far is unclear. Crypto investor Christopher Harbone has donated around $12 million in cash to the party.
Natasha Powell, crypto exchange Kraken's chief compliance officer, told lawmakers that regulated exchanges can manage much of the danger. Still, the committee wasn’t convinced and said the current framework lacks the tools and staff needed to verify donors, trace funds and avoid abuse. As such, it wants the moratorium written into the Representation of the People Bill.
The report adds that a ban on direct crypto gifts would not close every gap. A donor could still cash out cryptocurrencies into sterling before sending money through the banking system.
The committee also wants the Electoral Commission to gain powers to compel information from banks, the tax authority and crypto platforms when it suspects impermissible activity, the report adds.
Senior Labour members of parliament earlier this year called on Prime Minister Keir Starmer to ban cryptocurrency donations to political parties, over concerns these could be used by hostile foreign entities to influence elections.