(March 25): The UK government announced a moratorium on political donations in cryptocurrency and a cap on gifts from overseas electors as ministers seek to clamp down on the risk of foreign financial interference in British politics.
“We will do everything necessary to protect the UK’s democracy,” Communities Secretary Steve Reed told the House of Commons on Wednesday, responding to a review on the matter by former civil servant Philip Rycroft. "Mr Rycroft concludes that this country faces a persistent problem of foreign interests seeking to exert influence on and to interfere in our politics, and that the threat has become arguably more acute.”
Reed said that both the donation cap — set at £100,000 per year for overseas electors — and the crypto ban will come into effect immediately. Both measures — which were recommended by Rycroft — will be introduced as amendments to the Representation of the People Bill which is working its way through Parliament.
While Reed didn’t mention Nigel Farage’s poll-leading Reform UK Party, the measures taken Wednesday appear set to harm the populist right-wing outfit’s donor base. Reform last May said it had started accepting donations in crypto currency, the first party to do so. Meanwhile in the second half of last year, Reform outstripped all its rivals in terms of political donations, with £12 million stemming from just two cash gifts from the Thailand-based crypto investor Christopher Harborne.
Reform didn’t immediately reply to a request for comment.
Rycroft’s review was sparked by the bribery case surrounding a Reform UK politician. Last year, Nathan Gill, a former Welsh leader of Reform, was sentenced to 10.5 years in prison, pleading guilty to taking bribes in exchange for making statements in favour of Russia while serving as a member of the European Parliament.
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“I am ringing the alarm bell,” Rycroft said in a statement Wednesday accompanying his review. “The government must act quickly to further limit the risk of foreign financial interference in our politics. In these uncertain times, we must remember: the price of democratic freedom is eternal vigilance.”
Concerns stretch wider than usual foes such as Russia. Earlier this month, Parliament’s Joint Committee on the National Security Strategy used a report to call for an immediate ban on crypto donations until better rules are in place and said there was “deepening uncertainty about the trajectory of the current US administration, which has stated ambitions to shape the political direction of its allies.”
Alongside Reed’s announcement in Parliament, the government issued an emailed statement saying the crypto ban will apply “until Parliament and the Electoral Commission are satisfied that the regulatory environment is robust enough to ensure confidence and transparency in donations being made in this way".
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Reed said that “the anonymity inherent in cryptocurrency transactions could make it easier to mask the origin of donations and to evade robust checks on the true source of funds". He added that “illicit channelling of money into our politics is unacceptable and undermines public confidence in our electoral system.”
At present, parties must declare donations or aggregated donations exceeding £11,180 from a single source over a calendar year. Reed said the crypto moratorium applied to “any amount, including donations of a value that would ordinarily fall below the threshold for control on donations".
“There are specific risks posed by cryptocurrency donations, such as the risk of rapid, multiple, small donations being made just below our current thresholds,” he said.
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