UK Parliament Calls for Immediate Ban on Crypto Donations, But Security Experts Warn of New Risks

A cross-party UK parliamentary committee has urged the government to immediately ban cryptocurrency donations to political parties, citing national security concerns. The Joint Committee on the National Security Strategy (JCNSS) described crypto donations as an “unnecessary and unacceptably high risk to the integrity of the political finance system” in a report released this week.

The committee is pushing for a binding moratorium to be written into the Representation of the People Bill, which entered committee stage on Wednesday. Lawmakers say the move is necessary to prevent foreign interference and maintain public trust in UK politics ahead of the next general election.

“Few things are more important than maintaining trust in our politics,” said Matt Western MP, chair of the JCNSS. “The pervasive idea that politicians can be ‘bought’ through foreign money is increasingly corrosive. The Government must immediately ban political donations made through crypto until firm rules can be developed.”

The push reflects broader concerns about illicit funding in UK politics. Evidence presented to the committee highlighted how cryptocurrency tools like mixers, privacy coins, and cross-chain swaps can obscure the origin of funds. Lawmakers also noted that AI could enable automated “micro-donations,” breaking large contributions into numerous sub-£500 transfers, each falling below reporting thresholds under existing electoral law.

See also: UK Parliament Warns of Critical AI Oversight Gaps Threatening Financial Stability

However, security experts are flagging a major problem with the proposed solution. According to Kadan Stadelmann, founder of Komodo Blockchain, stricter donor-verification rules would require political parties to store personal data in centralized databases, creating what he calls “a massive honeypot” for hackers and adversaries.

“The only thing stricter donor KYC rules or an outright ban will accomplish is introducing new crypto vulnerabilities by forcing political parties to maintain personal data in centralized databases,” Stadelmann told Decrypt. “This constitutes a massive honeypot over which the UK’s adversaries would drool.”

Stadelmann pointed to high-profile precedents, including the 2024 breach of Donald Trump’s campaign servers and the 2016 hacks targeting Hillary Clinton and the Democratic National Committee. He argued that only “a truly decentralized architecture secured with cryptography” could achieve parliament’s stated goal of preventing foreign influence.

The committee’s report does acknowledge some nuance. Ian Taylor, board adviser at CryptoUK, argued that crypto can be transparent within regulated systems. Tom Keatinge, director of RUSI’s Centre for Finance and Security, warned that an outright ban may push activity offshore without addressing underlying risks.

Still, the committee concluded that current oversight of crypto donations is inadequate. “The opportunity to evade rules is too high,” the report stated, noting that while crypto can provide transparency and traceability in theory, enforcement mechanisms remain weak.

The scrutiny follows a high-profile case involving Reform UK. The party became the only major UK political party to accept crypto donations, starting last June. In 2025, Reform UK received a record £9 million donation from Christopher Harborne, a Tether-linked investor, prompting investigations by the Liberal Democrats and Labour. Labour also contacted the Financial Conduct Authority over the matter.

Earlier this month, Labour MP Rushanara Ali called crypto donations a vector for “foreign interference in our democracy,” citing tactics such as micro-donations and the use of multiple wallets to bypass disclosure rules.

The committee also recommends that the government establish a new Political Finance Enforcement Unit within the National Crime Agency to strengthen oversight. Additional proposals include tighter rules on overseas donors and enhanced transparency requirements.

The government has not yet responded to the committee’s recommendations. Still, the Representation of the People Bill’s progression through Parliament suggests these proposals will receive formal consideration in the coming weeks.