UK regulator seeks transparency in crypto donations to parties

The UK Electoral Commission has called for transparency on crypto-related political funding. According to reports, the first crypto donation was made to a political party in British history. However, sources claimed that it was not declared, in what many fear as a sliding doors moment in political funding.

The sources claimed that the electoral commission had been given prior notice by a party believed to be Reform UK that it had received a donation made in cryptocurrency over the past few weeks. Reform UK is not the only party that has accepted crypto donations. Its leader, Nigel Farage, announced it at a Bitcoin conference in Las Vegas in the spring. The party conference, which took place in Birmingham last month, was also sponsored by several finance groups, including at least two crypto firms.

UK Electoral Commission wants transparency in crypto donations reporting

While the value of the donation received by Reform UK is unknown, parties are only mandated to involve the commission if they receive more than £11,180 centrally. MPs, who have a low reporting threshold of £2,230, are expected to declare donations on their register first. “All donations above the reporting limit will be disclosed in the usual way,” a spokesperson for Reform UK said. This does not suggest that the funding was outside the window for formal declarations.

Although all things point towards Reform UK not breaking any law, politicians and transparency campaigners have also sounded the alarm about the risks posed by introducing digital assets into political financing. There are also fears that the regulator has neither the skills nor the resources to properly scrutinize transactions.

“We are in a naive place where I don’t believe the government has properly thought about the implications of crypto in the context of political donations,” said Tom Keatinge, director of the Royal United Services Institute’s Centre for Finance and Security. “Is it right or appropriate to say the controls we have for pounds and pence are also the right controls for bitcoin?”

Keatinge called for a moratorium on crypto donations to enable policymakers to establish whether further controls are required. Reform UK crypto payments processor Radom is based in Poland and is not a currency registered or regulated under the Financial Conduct Authority (FCA). This means that the platform falls outside the regulator’s anti-money laundering supervision.

Campaign groups want a ban on crypto in political funding

Christopher Wilson, chief executive officer of Radom, noted that there were no requirements to take any steps in line with the FCA, but noted that they would align with the requirements laid down by the regulator once it becomes law. He also added that Reform UK was also “responsible for ensuring [the party’s] compliance with Electoral Commission rules.”

Susan Hawley, executive director at campaign group Spotlight on Corruption, said this represents a watershed moment for political donations in the United Kingdom, which is fraught with risk. “It is not clear that either political parties themselves or the Electoral Commission have the expertise and know-how to prevent anonymous crypto donations from illegal donors. It leaves the UK extremely vulnerable to interference from hostile foreign powers and even organized crime gangs,” she said.

She also added that new interim rules from the electoral commission should be created to establish some safeguards, noting that the forthcoming elections bill must introduce a complete ban on crypto donations. Meanwhile, veteran Labour MP Liam Byrne is organizing a cross-party campaign to demand a total ban on crypto in political donations.

“To date, no political party has reported any donations that they have identified as cryptocurrency. Political parties … are required to report donations and loans over £11,180 to us on a quarterly basis … We do not routinely share details of unpublished donations before quarterly publications,” a spokesperson for the Electoral Commission said.

Sharpen your strategy with mentorship daily ideas - 30 days free access to our trading program