A cross-party parliamentary committee has urged the UK government to "immediately ban" cryptocurrency donations to political parties, citing "unacceptably high" risks to electoral integrity.

In a statement released Wednesday, lawmakers recommended a binding moratorium through amendments to the Representation of the People Bill until enforceable safeguards are in place.

The committee's 47-page report outlined how crypto-based transfers can bypass traditional financial controls. It pointed to the use of mixers and tumblers to obscure fund flows, privacy coins to conceal transaction histories, and swap services and chain-hopping techniques to mask the origin and movement of funds across jurisdictions.

Lawmakers also highlighted persistent gaps in verifying donors' source of wealth when crypto is converted into fiat. Micro-donations below the £500 ($667) disclosure threshold were flagged as a "particular concern," with the report noting that AI tools could fragment larger transfers into multiple £499 contributions to avoid scrutiny.

Industry views

Ian Taylor, board adviser at CryptoUK, acknowledged that automated micro-donations at scale are "feasible," but said the level of risk would depend on how robust any new rules are.

Natasha Powell, chief compliance officer at Kraken, argued that while intermediaries can obscure donation flows, blockchain tracing tools are capable of identifying wallets distributing funds across multiple recipients, describing such capabilities as "achievable and deployable" and "not NASA."

Despite these capabilities, the committee concluded that crypto donations currently pose "an unnecessary and unacceptably high risk" to the political finance system.

"At present, however, the opportunity to evade rules is too high, the adequacy of mitigations too low, and the resource cost of attempting to implement acceptable oversight is disproportionate," the report said. "We see no democratic imperative to permit the use of crypto in political finance until adequate safeguards are in place."

The lawmakers' recommendations come as political donations in the UK reached nearly £65 million ($86.7 million) in 2025, according to Electoral Commission data, including a £3 million ($4 million) contribution from Thailand-based crypto investor Christopher Harborne to Reform UK, according to a report by The Guardian.

Policy pathways 

The report examined two approaches: an outright ban or a temporary moratorium. The UK Anti-Corruption Coalition argued for a ban, noting that cryptocurrency transactions are "typically linked only to wallet addresses rather than verified real-world identities" and citing precedent in Ireland, Brazil and several U.S. states.

Industry representatives pushed back. Taylor described a ban as "undemocratic," while Powell said regulation would be more effective than prohibition, warning that banning crypto donations could push activity offshore.

Tom Keatinge, director of RUSI's Centre for Finance and Security, also cautioned against overreliance on bans. Keatinge noted that donors could convert crypto into sterling before making contributions through traditional banking channels, potentially evading detection.

Moratorium

The committee ultimately backed a moratorium — a temporary ban — as the fastest way to curb risks while a more comprehensive framework is developed. Lawmakers recommended the measure remain in place until the Electoral Commission establishes statutory guidance approved by Parliament.

The commission has already advised "especially cautious" handling of crypto donations involving mixers or AI-based transaction splitting, but lacks binding authority. It has called for discretionary powers to issue enforceable guidance that can adapt to evolving technologies.

Alongside the moratorium, the report calls for broader reforms, including the creation of a centralized political finance enforcement unit within the National Crime Agency, stricter requirements for overseas donors, a lower disclosure threshold, and prison sentences of up to three years for serious violations.