Security committee chair seeks pause until clearer regulatory safeguards are in place
The chair of the UK’s Joint Committee on National Security Strategy has urged the government to impose a temporary ban on cryptocurrency donations to political parties, warning that digital assets could be exploited for foreign interference.
In a letter sent Monday to Housing Secretary Steve Reed, Labour MP Matt Western recommended adding a “temporary moratorium” on crypto donations to the upcoming Representation of the People Bill. The restriction, he said, should remain in place until the Electoral Commission issues formal statutory guidance on how such contributions should be handled.
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Western argued that geopolitical tensions and the UK’s expanding military role in Europe could increase incentives for foreign actors to influence British political debate — including positions on Ukraine and transatlantic relations.
“We are concerned that foreign state intent to interfere in UK political finance may grow in the run-up to the next election,” Western wrote.
Matt Western’s letter to Steve Reed. Source: UK Parliament
Push for stricter oversight of crypto sources
Western’s proposal follows earlier calls from parliamentary committee chairs for a full ban on crypto donations, citing the potential for opaque funding channels. While the bill introduced to the House of Commons in February did not include an outright prohibition, the issue remains under active debate.
Under Western’s latest recommendation, political parties would be required to use only crypto service providers registered with the Financial Conduct Authority. Donations linked to crypto mixers or originating from unverifiable sources would be prohibited.
He also proposed that parties convert any crypto donations into fiat currency within 48 hours to reduce volatility risk and minimize exposure to illicit flows.
The UK’s next general election must be held by August 2029, and the Representation of the People Bill is scheduled for further parliamentary debate in early March.
Broader enforcement gaps flagged
Beyond immediate restrictions, Western called for structural reforms to address what he described as fragmented oversight of political finance enforcement.
Currently, responsibilities are divided among the Electoral Commission, the Metropolitan Police, Counter-Terror Policing, the National Crime Agency, MI5 and local police forces. Western suggested creating a national police body specifically tasked with overseeing political finance and combating foreign interference.
Additional recommendations included enhanced source-of-wealth checks for donors, stronger sentencing for electoral finance violations and expanded powers for the Electoral Commission to compel financial institutions to disclose funding origins.
Crypto enters UK political fundraising
The debate intensified after Reform UK became the first British political party to accept cryptocurrency donations. Party leader Nigel Farage announced in May last year that the group would accept Bitcoin and other digital assets from eligible contributors, marking a shift in UK political fundraising practices.
While proponents argue that crypto can expand participation and modernize campaign finance, critics warn that anonymity features and cross-border transferability create new compliance challenges.
As lawmakers weigh temporary restrictions, the outcome could shape how digital assets intersect with political finance in the UK ahead of the next national vote.