UK bill would ban crypto donations in election funding

Parliament has introduced an elections bill that would ban political donations made in cryptocurrency. The proposal requires campaign contributions to be made in conventional currency through established banking systems so donations can be traced and verified.

The measure would prohibit parties and candidates from accepting direct payments in crypto assets. Donations would be subject to the same eligibility checks and reporting rules that apply to cash or bank transfers. Lawmakers cited concerns that transfers to decentralized wallets can obscure the origin of funds, complicate identity checks and make it harder to value volatile assets at the point of donation.

Enforcement would be the responsibility of the Electoral Commission. The commission would monitor donation returns filed by parties, investigate suspected breaches and apply penalties set out in the legislation. The bill sets out that sanctions will apply to those who accept prohibited donations, with specific levels of fines and other sanctions to be detailed as the bill progresses through Parliament.

Parties and fundraising platforms that have accepted cryptocurrency would need to stop taking new crypto contributions if the ban becomes law. Existing crypto donations may need to be converted to sterling through regulated exchanges or returned to donors. The draft bill requires clear records of any conversions and the point-in-time valuation used for reporting, to prevent manipulation of declared amounts.

Legal and compliance advisers note a number of technical questions for the bill’s drafting and parliamentary scrutiny. Lawmakers will need to define “crypto assets” for the statute, decide how to treat stablecoins and tokenized sterling, and set rules for peer-to-peer transfers where no intermediary is involved. The legislation will also need transitional arrangements for donations made before the rules take effect and clarification of audit requirements for converted funds.

The proposal comes alongside existing UK rules that limit donations from foreign sources and require disclosure of donations above set thresholds. Supporters of the ban say the current framework depends on traceable financial trails and identity checks that are harder to apply to crypto. Opponents say a blanket prohibition could reduce engagement from younger or tech-savvy donors and complicate lawful small-value gifts.