Just before Parliament headed off on summer holiday, the government announced its plan for keeping cryptocurrency out of the funding of our elections, with an amendment to the Representation of the People Bill.
That amendment now proposes a full ban on cryptocurrency donations. But does the text of the amendment actually go far enough to truly stop cryptocurrency funding leaking into our political finance system?
A moratorium or a ban?
In March 2026, the Rycroft review into foreign interference recommended a ‘moratorium’ on cryptocurrency donations. In proposing his moratorium, Rycroft said that an amendment to the Representation of the People Bill should also include “a power to end the moratorium only once Parliament and the Electoral Commission are assured that relevant regulation is effective.” [emphasis added]
At the same time, Rycroft rejected calls to allow the small market in cryptocurrency donations to “grow, under tight supervision by the Electoral Commission and subject to strict rules, for example the use of only UK-regulated exchanges.” More recently, in evidence in Parliament, he said that it could take up to five years before Parliament would be confident for an appropriate regulatory regime to be developed . Rycroft also confirmed in that same evidence that, in his view, the wider cryptocurrency regulatory system in the UK “has to be seen to be absolutely robust in terms of where money going into the political process is coming from. It has to be held to a very high standard, and in terms of the traceability of crypto assets I do not think those standards could be met at the moment.”
Getting the right parliamentary mechanism to lift the current moratorium on crypto donations is critical, not least to assuage the concerns of MPs who would like to see a full scale ban. Investigative journalist Oliver Bullough has said a categorical ban “would be better, not just because it would be harder to undo but because of the message it would send.”
The government’s amendment ensures that a ban can only be overturned by primary legislation. This is the only way in our view to prevent a minister later overturning the moratorium via secondary legislation with purely tokenistic parliamentary oversight. Any decision to allow cryptocurrency into the UK’s political finance, as well as any new rules to govern such donations, will now have to be subject to full Parliamentary scrutiny.
This provides a vital long-term safeguard for our democracy against cryptocurrency donations that enable malign foreign influence activity or illicit money to be pumped into UK political parties.
Why a full ban is needed
It is clear that the UK is simply not ready to regulate cryptocurrency donations safely at the moment. And it is not really a question of when, but if we will ever be able to safely allow crypto donations into our political finance regime.
We have been warning how it would be shortsighted to lift a ban on crypto donations too soon, especially as the wider regulatory regime for cryptoassets in the UK won’t come into force until October 2027, and will likely take years to bed in.
In addition, the Electoral Commission would face an uphill struggle trying to regulate the space effectively. Tracing crypto transactions through the blockchain and accurately pinning them to real life identities could become progressively harder if the industry continues to trend towards protecting the privacy of its customers. We are also seeing more examples of regulated crypto providers and exchanges refusing to play ball and share information with law enforcement agencies.
The regulator previously told a parliamentary committee on national security that, while it is possible to track donations back to different wallets, “particularly abroad it is very hard to work out who is actually controlling or who owns that wallet”. Furthermore, the Electoral Commission does not have powers to undertake investigations outside of the UK.
Oliver Bullough puts it this way, “It is hard to imagine Britain’s overstretched law enforcement agencies and regulators ever becoming potent enough to police political donations coming from this diverse, ever-shifting ecosystem”.
A stronger option on the table
But in some ways, the government amendment does not go far enough to foresee and tackle potential gaping loopholes. The Byrne amendment, which is being debated this week as the Representation of the People Bill comes back to Parliament, does address some of these by explicitly addressing the role that crypto asset exchanges can play in facilitating donations that originated in cryptocurrency.
This would cover one of the main mechanisms used to accept crypto donations before the government’s moratorium came into place – Reform UK for instance received donations in Bitcoin, Ethereum, Solana and Tether through a third-party payment portal, provided by the company, Radom.
These donations would have gone to one of Radom’s hundreds of intermediary crypto wallets for ID and permissibility checks, and then mixed up in a Radom-owned wallet along with other deposits related to the company’s other customers, then ultimately ‘offramped’ or converted into fiat before being sent on to a Reform-owned bank account.
This setup makes it almost impossible to trace donations unless they are declared to the Electoral Commission, or very specific information about them is publicly disclosed.
As new EU regulations around cryptocurrency come into full force, Radom has recently moved its registration from Poland to the Cook Islands and no longer offers a public donations portal for Reform UK. But the government should provide some urgent clarity on this issue to stop political parties from trying to exploit what could be a major loophole.
Memecoins: A new vehicle for dark money
Byrne’s amendment also confronts the emerging threat of memecoins.
In the USA, the $TRUMP memecoin has been used as a key fundraising tool by the President. The relative anonymity afforded to those investing in memecoins has opened up a potential route for foreign state actors to covertly buy influence in the White House, as holders of this digital token have been given privileged access to Trump.
This might be good for politicians but it has not gone well for ordinary investors. Reports suggest that investors in the $TRUMP coin have collectively lost $3.8bn.
A much smaller scale case study of this emerged in the UK, following our research, where funds were raised for Restore Britain through a ‘creator fee’ tax on investments in a $BRITAIN digital token or ‘memecoin’, aggregated and then converted into fiat before being donated to the party in block amounts.
It is impossible to identify whether the individuals investing in the memecoin, and therefore contributing to aggregated donations to Restore Britain, were legally allowed to make a donation to a UK political party. In this case, Restore Britain ultimately returned these donations, as the ‘Britain Token’ entity involved had no identifiable legal status and was therefore an impermissible donor.
But there are real questions over whether the seemingly limited scope of the government’s ban would prevent a permissible donor from successfully replicating this scheme for other political parties. This is where Byrne’s amendment is especially vital.
Off-ramping – tackling the upstream threat of crypto
The government’s amendment will not ultimately address the wider threats posed by individuals looking to circumvent the ban by ‘off-ramping’ i.e. converting crypto to fiat before making a donation.
This is why further measures are needed, including some further legislative changes as the Bill passes through Parliament. This includes:
- Specific requirements in new donor declarations for individuals and companies to declare whether the donations they are making in fiat have derived, or been converted, from crypto
- Ensuring the Electoral Commission’s new powers of investigation and information sharing powers will enable it to request information from crypto exchanges and the Financial Conduct Authority as the main regulator of cryptocurrency exchanges
- Additional resources for the regulator to develop in-house expertise to trace crypto transactions
