While countries like the United States explore crypto as a new campaign fundraising tool, ministers in United Kingdom are sounding the alarm, with one calling for a ban on crypto donations over concerns about traceability and foreign interference.On Tuesday, Pat McFadden, a Cabinet Office minister, said he thought there was a case to be made for banning such donations, considering how hard they are to trace.McFadden addressed the topic after being asked by Labour Party member Liam Byrne about banning crypto fundraising, saying that the UK should always keep its legislation up to date to ensure that the financing of politics can be trusted by the public.
The funding of democracy is often a controversial area but I think that its very important that we know who is providing the donation, are they properly registered, what are the bona fides of that donation.
I think its a very important question youve asked.While crypto donations have gained momentum in the US, where figures like US President Donald Trump have openly courted the digital asset sector, the UKs pushback reflects a growing divergence in how governments are approaching the intersection of crypto and democracy.Both McFadden and Byrne said cryptos potential influence on politics could be addressed by further funding the UKs National Crime Agency and Electoral Commission.The debate comes two months after Nigel Farages Reform UK party announced it would become the first political party in the UK to accept political donations in Bitcoin.A UK-based nonprofit anti-corruption watchdog recently released a report that says the risk of foreign entities or funds from criminal origins entering UK politics is increased by allowing crypto donations.
It noted that crypto could contribute to future political interference schemes.Related: Clarity Act isnt perfect, but its the bill the US Congress must pass this summerThe UK isnt the only country pushing back on crypto donations to political parties.
In 2022, Ireland banned all crypto contributions to political entities to protect its democracy from the threat of foreign interference.
The amendment also addressed misinformation, transparency requirements for political parties and rules governing foreign donations.In the US, several states, including Oregon, Michigan and North Carolina, have banned crypto donations to political campaigns due to concerns around traceability, transparency and compliance with election finance laws.
In 2018, California banned crypto donations, but that legislation was repealed in 2022.Related: El Salvador has bought 240 Bitcoin since IMF non-accumulation agreementEl Salvador, a country that has embraced Bitcoin perhaps more than any other, has no ban on crypto donations.
However, in 2022, a civic group called Accin Ciudadana warned about the lack of oversight in El Salvadors political funding, where Bitcoins legal tender status could leave the door wide open for organized crime or foreign actors to influence elections anonymously.As crypto donations rise globally, lawmakers and politicians continue to grapple with the regulatory gaps that digital assets expose.
In the US 2024 election alone, cryptocurrency firms spent a cumulative $134 million to support pro-crypto candidates, fueling both momentum and concern.Magazine: SECs U-turn on crypto leaves key questions unanswered