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The Government is being urged to urgently ‘close the loopholes’ which could allow hostile states and malicious actors to donate to political parties via untraceable cryptocurrencies.
Reform UK became the first party earlier this year to allow donations via cryptocurrencies, despite anti-corruption campaigners fearing they leave the door open to anonymous donations from criminals and Britain’s adversaries.
Nigel Farage and Reform deputy Richard Tice MP met the Governor of the Bank of England on Thursday and reportedly lobbied for looser regulations on crypto while branding the Bank a “dinosaur” when it came to rules on the largely unregulated financial assets.
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While donors have to go through a portal and submit an official ID to donate using cryptocurrencies, the ultimate source of the funds remains difficult to trace. There is no suggestion that Reform UK has broken any rules.
Last weekend, a Lib Dem MP condemned the gaps in UK election law and the fact that cryptocurrency was barely mentioned in the recent Government’s elections strategy, which is set to lead to a new Elections and Democracy Bill in the coming months.
The comments came in a session organised by the UK Anti-Corruption Coalition titled ‘Brave New World: Fighting Corruption and Oligarchs in an era of Trump’.
Mike Martin MP explained crypto vulnerabilities in UK electoral finance, saying: “The way thresholds are set, you can break big donations down into small ones and then give them and they fall below the thresholds and don’t get registered.
And that is now being driven using crypto and crypto wallets. So you break down huge amounts of money into tiny donations – micro donations …You can inject huge amounts of finance into political parties without them appearing on any return, without anyone knowing what’s going on
Mike Martin, Lib Dem MP
In July, senior Labour MP Liam Byrne said a “better solution” than tightening up existing rules “would be banning crypto donations outright”. He noted that Ireland and Brazil had already done so due to the perceived risks of foreign interference.
The Electoral Commission has told Byline Times that no donations via crypto have yet been registered with the Commission, which is likely to add to concerns donations are going unreported or split into smaller batches to dip below the reporting thresholds. The current rules are meant to guard against this, but the origin of cryptocurrencies are much harder to trace than bank transactions.
Martin noted the potential sophistication of rule-evading methods, saying cryptocurrencies have a “ledger that is perfectly traceable – however, if you move stuff into crypto out of crypto, into this coin, into that coin, into that wallet…and then you split it into micro-donations…It’s perfectly [possible] to effectively disappear money and then reappear it again in the bank accounts [of] political parties, and it’s impossible to tell where it’s coming from.”
The Lib Dem MP pointed to other gaps in the law, claiming that Farage’s GB News salary while still a serving MP should be understood as a political “donation”.
“[You have a media organisation that happens to pay a prominent politician £900,000 a year…That’s effectively a donation for work in return. It’s declared, it looks like a job.
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