Crypto is now at the center of the UK’s debate on campaign finance reform, with some members of parliament calling for a ban on crypto donations.
Cabinet Office Minister Pat McFadden of the UK Labour Party told fellow MPs on July 14 that cryptocurrency donations to political campaigns should be banned. McFadden, who is a close ally of Prime Minister Keir Starmer, raised concerns about crypto’s possible use by foreign actors interfering in UK politics.
The MP’s comments come a month after Nigel Farage, head of the right-wing populist Reform Party, announced that his party would accept crypto donations. Parliamentarians also expect a strategy paper recommending that laws on foreign influence on UK elections be strengthened.
As the UK enters a public debate over how it conducts its elections, crypto will invariably come under policymakers’ microscope as the government considers how to move forward.
Crypto donations and the risk to UK elections
The UK won’t have its next general election until 2029, at the latest, but Farage’s Reform is surging as Starmer’s government stalls. With his eyes on parliament, Farage has said that crypto campaign donations represent an innovative step forward for the UK.
“My message to the British public, and my message particularly to young people, is to help us to help you bring our country properly into the 21st century […] Let’s recognise that crypto and digital assets are here to stay,” he said at the end of May.
After the 2024 general elections, former Conservative MP and Crypto Parliamentary Group Chair Lisa Cameron said, “Any party that doesn’t have any mention of [crypto] in the next election will be doing local constituencies a disservice.”
Crypto skeptics in Labour are not convinced. Chief among Labour MPs’ concerns over crypto election campaign contributions was the ability for digital assets to allow foreign entities to influence the outcome of elections.
During a meeting of a joint Commons and Lords committee on national security, McFadden said that cryptocurrencies “may play a role in future political interference schemes.”
Fellow MP Liam Byrne concurred, saying, “If we want to clean up politics, we must root out the dark money, hidden money and foreign money. That means banning cryptocurrency donations, donations from unincorporated associations and donations financed by foreign profits. Crucially it means beefing up the National Crime Agency and Electoral Commission.”
Related: UK to require crypto firms to report every customer transaction
In an opinion piece for the Guardian, Byrne cited a Centre for Information Resilience report that Israeli oligarch Ilan Shor used crypto to influence Moldovan elections.
Some legal experts take issue with the Labour MPs’ characterization of crypto. Tom Spiller, partner at Rosenblatt Law, which specializes in cryptocurrencies, told Cointelegraph that he doesn’t agree with dark money concerns about political donations.
“The parties are very much incentivized to declare the identity of all donors and, on the whole, do a good job of reporting donations.”
“Donations in crypto do not pose any higher risk than donations of ordinary fiat currency. And on this point, the world’s mainstream banks have done far more to facilitate crime/organized crime/money laundering/terrorist financing than all of the world’s crypto companies combined,” he stated.
MPs look to close campaign donation loopholes
Spiller said that if laws regulating donations in ordinary money are adequate, then there’s no reason for additional rules for crypto.
The UK Election Commission has strict rules overseeing campaign donations. Any contributions over 500 British pounds must be reported, which means disclosing:
The identity of the source
The section of the party that accepted the donation (i.e., the central party or accounting unit)
The amount of the donation or the nature and value of the donation, if the donation is non-money
The dates on which the donation was received and accepted.
Candidate spending limits are also quite low, with the election commission setting a fixed amount multiplied by the number of registered voters in a candidate’s district.
“Our spending limits in this country are well beneath the amount it should take in order to make an MP a biddable servant of a hostile foreign power. I’m afraid people who share this view have been watching too much telly,” said Spiller.
The system is not impervious, however. As noted by Susan Hawley, executive director of Spotlight on Corruption, current “gifting” rules could allow an anonymous nefarious actor to give a donation to a “permissible donor,” who in turn passes it to a party or candidate.
“Under the current regime, it seems to me that just having the identity of the last handler of the crypto, so to speak, is not really much protection for British democracy,” she said.
Anti-corruption agency Transparency International UK found that one in 10 pounds among political donations comes from “unknown or questionable sources, including those who have been accused or found to have bought political access or involved in criminality.”
MPs are looking to close these gaps. As noted above, a forthcoming strategy paper will outline their legislative agenda for additional campaign finance regulations.
On Thursday, the Labour government announced that “election finance laws are back on the agenda.” The forthcoming updates to campaign finance policy will reportedly include “new controls on company donations” in addition to donor due diligence requirements for political parties. They are also looking to crack down on donations through shell companies.
Crypto, foreign influence and the crypto lobby
Transparency and anti-corruption organizations, lawmakers and the general public have all raised the issue of crypto’s potential role to influence politics if it goes unregulated.
In its aforementioned announcement, the Labour Party pointed to the United States as “a warning to the dangers of oligarchic democracy.”
“With unlimited corporate spending, super PACs and billionaire oligarchs like Elon Musk essentially buying government roles, American democracy has become a playground for the ultra-wealthy at the expense of democratic integrity,” it said.
After US President Donald Trump’s infamous “memecoin dinner,” where top investors in his memecoin were promised a meeting with the president, lawmakers called for an investigation into the potential for foreign actors to directly influence the president.
“US law prohibits foreign persons from contributing to US political campaigns,” said a letter from US representatives. “However, the $TRUMP memecoin, including the promotion of a dinner promising exclusive access to the President, opens the door for foreign governments to buy influence with the President, all without disclosing their identities.”
Related: Crypto has a regulatory capture problem in Washington — or does it?
Aside from foreign influence, there is also the issue of the crypto lobby’s regulatory capture.
The US crypto industry super political action committee (PAC) Fairshake has already amassed a huge war chest of $141 million, which it plans to use in the US midterm congressional elections. The sum includes over $50 million raised in the first half of 2025 alone.
Fairshake spokesperson Josh Vlasto said, “We are building an aggressive, targeted strategy for next year to ensure that pro-crypto voices are heard in key races across the country.”
Whether as a tool for foreign influence or for the crypto lobby to write its own laws, democracies now must contend with crypto’s influence in politics and plan accordingly.
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