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Campaigners have called for a legal loophole to be closed which potentially allows foreign donations to flow into UK parties via cryptocurrencies.
In a new warning from the non-profit watchdog Spotlight on Corruption, researchers note that the risk of funds of criminal origin, or from hostile foreign actors entering UK politics has increased in the age of untraceable cryptocurrencies – with Reform becoming the first this May to accept donations in crypto.
The risk is that crypto donations are used to avoid already-weak laws limiting foreign interference in UK politics.
Dr Susan Hawley, Executive Director of Spotlight on Corruption, told Byline Times crypto donations to parties “poses unique risks”.
“Under the current rules, I would say all the donations in crypto that happen between now and the new elections bill are going to be extremely high risk. The Government clearly needs to tighten the rules.”
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And although Reform’s donations page for crypto requires donors to prove their identity through a third party verification service, Hawley notes that it’s not currently illegal for “gifting” to take place. “For instance, as long as the donation comes from a permissible donor, it doesn’t matter who gave that permissible donor the money. And the permissible donor route is now so wide, given that it includes overseas voters as well.”
The last Conservative Government scrapped the previous 15-year limit on how long a Brit could live abroad before they could no longer vote or donate to parties from overseas.
Hawley added: “Under the current regime, it seems to me that just having the identity of the last handler of the crypto, so to speak, is not really much protection for British democracy.”
A report released by the Centre for Information Resilience in June 2025 identified that the new A7A5 cryptocurrency, which Spotlight on Corruption says has been used in sanctions evasion, was “used in electoral interference in Moldova and may play a role in future political interference schemes.” However, there are hundreds of cryptocurrencies, many of which boast about users’ anonymity and un-traceability.
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“Some crypto currencies, such as Monero or Zcash, are designed to obscure the identity and location of an individual or entity, making it extremely unlikely parties will be able to verify the true source of their funds,” Spotlight says, adding that this poses “distinct transparency and enforcement challenges.”
“It is particularly easy for a single actor to donate using multiple crypto wallets with different addresses, fragmenting large donations into smaller amounts to bypass the reporting threshold,” a new briefing from the group says.
“Because digital currencies are inherently borderless and bypass banks and central oversight – and many countries lack adequate regulation – these transactions often avoid any anti-money laundering scrutiny,” the briefing adds.
Spotlight is calling for the Government to look at prohibiting cryptocurrency donations altogether, as Ireland and Brazil have recently done, to “prevent political interference and ensure full transparency of political donations.”
“At the very least, consideration must be given to banning donations using cryptocurrencies that are designed to enable anonymity and mixing of legitimate and illicit funds, and those without a public or open ledger [record], and that are unsupported by a central bank.”
An Election Bill is due to be introduced to Parliament, which Spotlight expects to include reference to anonymous crypto donations.
In the meantime, they want to see the Electoral Commission provide clear guidance on how to properly record crypto donations – such as the specific currency used, valuation method, or time of conversion. The US’ electoral body already does this.
And they’re calling for guidance on how parties should assess how crypto donations are accepted overall.
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A spokesperson for Spotlight on Corruption said: “Without action in line with the recommendations made above, the British electoral system in general, and the next General Election in particular, will remain wide open to abuse and foreign interference with potentially devastating consequences for our politics and our country. This is a risk to our national security but also to the integrity of our elections and ultimately our democracy.”
Spotlight also points to several potential new non-party campaign groups which have been created over the past six months “with a specific focus on political campaigning associated with the Reform party.”
“These include the Great British Political Action Committee, which is yet to register with the Electoral Commission, and Resolute 1850, which plans to seek multiple US donors while providing policy support to Reform.” The latter has already lined up £1m in donations according to the Financial Times.
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It is a legal “grey area” at present how these groups accept foreign donations and then use it to promote particular political parties, Spotlight adds.
The whole area of electoral law, however, is “a game of whack-a-mole” so requires a “whole system approach”, Susan Hawley told Byline Times.
“What we need to make sure is that the Electoral Commission has got the right intelligence and resourcing to be quite future-proofing around. If it’s not crypto, there’ll be something else, right?”
The Electoral Commission has the power to create new regulations on crypto donations to parties. “Maybe they’re doing it as we speak,” Hawley says. How much will be donated to Reform UK or non-party political groups in the meantime?
With thanks to readers and council staff for story tips. Keep them coming. Do you live in a Reform-run council area? Get in touch in confidence on josiah@bylinetimes.com
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