Keir Starmer must impose a full ban on cryptocurrency being used for political donations or risk losing control of a key new piece of legislation, senior Labour backbenchers warn.
Former minister Liam Byrne, who chairs the business and trade select committee, and six colleagues, including Emily Thornberry, chair of the foreign affairs committee, and Matt Western, who heads the joint committee on national security strategy, have signed an open letter to the prime minister setting out a number of concerns that emerged in committee evidence sessions.
These include the risk of crypto being used by hostile foreign states or other malign groups; the use of technologies and systems that are outside UK regulation; and the ability of AI to further obscure the source of funds.
They are urging Starmer to use the forthcoming elections bill, expected later this month, to make “explicit provision to disallow cryptocurrency donations to political parties and politicians”.
Currently the UK allows parties and individuals to accept crypto donations, subject to the usual permissibility checks, although only three registered political parties do so, of which Reform UK is the most mainstream. The party has confirmed that it has received at least one crypto donation.
The government has given little sign that the elections bill will include an outright ban, although the matter is understood to remain under consideration. The recent review into foreign financial interference in UK politics, led by former senior civil servant Philip Rycroft, includes a focus on crypto, but is not expected to conclude until March.
Byrne said: “The letter was just the starting point of a backbench push to have crypto outlawed, until such time as oversight is possible.
“If the elections bill doesn’t ban cryptocurrency donations, I will move amendments to make sure it does, and I know scores of MPs will back it,” he said. “Anonymous money has no place in British democracy.
Related articles:
“When technology makes foreign interference cheaper, faster and harder to trace, the answer isn’t an open door. We have to bolt the door shut.”
Thornberry said: “If we want to protect our democracy, we must ban the use of crypto. The FAC has been studying threats to democracy around the world, and we've learnt that crypto is the Russian slush fund of choice.”
Newsletters
Choose the newsletters you want to receive
View more
For information about how The Observer protects your data, read our Privacy Policy
A spokesperson for the Ministry of Housing, Communities and Local Government, the lead department on both the forthcoming bill and the Rycroft review, said: “Tackling the scourge of foreign financial interference in UK politics and protecting our democracy is vital and is a priority for the Secretary of State.”
Other signatories of the letter include Tan Dhesi (Defence), Florence Eshalomi (Communities), Chi Onwurah (Science and Technology) and Andy Slaughter (Justice).
Photograph by Steven May / Alamy