UK politicians concerned with foreign interference in politics are calling for temporary restrictions on crypto donations to be put in place until permanent legislation is drafted.
The Joint Committee on the National Security Strategy called for the measures in a letter to the UK’s Communities Secretary, Steve Reed, on Tuesday.
In the letter, Committee Chair Matt Western recommended five temporary measures:
- A temporary ban on accepting crypto donations until the Electoral Commission publishes its own guidance on interim crypto measures.
- Crypto donors should be prevented from using crypto firms that aren’t registered with the Financial Conduct Authority to make their donations
- Donations should be converted into sterling within 48 hours of their receipt.
- Crypto that’s been “upstream” from crypto mixers and tumblers, such as Tornado Cash, should be prohibited.
- Crypto should only be accepted when an individual has “high confidence” about its origins.
Kraken says crypto ban will ‘displace’ political donations
The committee took into consideration the views of various stakeholders, crypto entities, charities, and research groups when deciding on its recommendations.
Despite this, not everybody is happy. Kraken’s Chief Compliance Officer Natasha Powell, for example, warned that a ban would displace crypto donors to shadier avenues of funding, and that donors should be allowed to make donations from UK-regulated institutions.
“If you say, ‘No crypto donations, they’re illegal,’ people will go offshore and find different ways of doing them,” said Powell. “They will keep happening; they will just do so under the radar.”
Read more: Nigel Farage milkshake’d while touring with shady crypto ally
The director of the Centre for Finance and Security at RUSI agreed with Powell, and called for a “moratorium until such time as we are sure that we have the right checks and balances in place.”
The anti-corruption charity Spotlight on Corruption has also suggested various measures to tackle shady crypto donations, while the Electoral Commission has said it could be given discretionary power to draft crypto donation guidance.
“This could involve producing non-statutory guidance at first, which could be changed to statutory guidance if required,” the letter reads.
The letter also highlights that, as the UK’s military role in Europe grows, and the security environment worsens, “the value of influencing the UK’s political positions (for example on Ukraine, or US/EU relations) is likely to increase.”
His letter also recommended tougher sentences for electoral finance offences, a singular group dedicated to policing political finance and foreign interference risks, and increased wealth checks for political donors.
Crypto donation ban would upset Reform UK
The only major party currently accepting crypto donations in the UK is Nigel Farage’s Reform UK. The right-wing party announced its acceptance of crypto donations last May as part of an effort to appeal to crypto investors.
It’s received over £19 million ($25.6 million) in donations from Tether shareholder Christopher Harbourne over the years and has also reportedly received some crypto donations, but hasn’t disclosed who from.
Because of this, Labour and Liberal Democrat MPs have called for an investigation that looks to determine any potential conflicts of interest that might “undermine public trust in the integrity of our political system.”
Read more: Scoop: Bitfinex, Tether shareholder Harborne is Nigel Farage’s top donor
One of Farage’s close allies, George Cottrell, is linked to a Polymarket wallet that made millions betting on the outcome of various Donald Trump-related prediction markets.
Cottrell was also convicted of wire fraud after he was caught agreeing to launder drug trafficking proceeds. He allegedly threatened to report the fake drug traffickers unless they paid him $80,000 worth of bitcoin.
He’s also launching a book called How To Launder Money, and his mother, Fiona Cottrell, has also donated £750,000 ($1 million) to Reform UK.
