Calls for transparency on political funding after first crypto donation made to UK party

Several sources told The Observer that the Electoral Commission had been given prior notice by a party, understood to be Reform UK, that it had received a donation made in cryptocurrency in recent weeks.

Reform is the only political party in Europe to accept donations in crypto, something that its leader, Nigel Farage, announced at a bitcoin conference in Las Vegas in spring. Its party conference in Birmingham last month was sponsored by several alternative finance groups, including at least two crypto companies.

While the value of the donation is not yet known, parties only need to notify the commission if they have received more than £11,180 centrally. MPs, who have a lower reporting threshold of £2,230, are expected to declare donations on their register first.

A Reform spokesman said: “All donations above the reporting limit will be disclosed in the usual way.”

There is no suggestion that it is outside the required window for a formal declaration and no rules have been broken.

Many politicians and transparency campaigners have sounded the alarm about the risks posed by introducing crypto into political financing, as well as fears that the regulator has neither the skills nor resources to properly scrutinise transactions.

“We are in a naive place where I don’t believe the government has properly thought about the implications of crypto in the context of political donations,” said Tom Keatinge, director of the Royal United Services Institute’s Centre for Finance and Security. “Is it right or appropriate to say the controls we have for pounds and pence are also the right controls for bitcoin?”

He called for a moratorium on crypto donations to enable policymakers to establish whether further controls were required.

Reform’s crypto payments processor Radom is based in Poland and is not currently regulated by the Financial Conduct Authority (FCA), meaning that it falls outside the regulator’s anti-money-laundering supervision.

Radom’s chief executive, Christopher Wilson, said there was “no requirement for us to take any FCA steps” but would “align with any requirements once they become law”. He noted that Reform was “responsible for ensuring [the party’s] compliance with Electoral Commission rules.”

Susan Hawley, executive director at campaign group Spotlight on Corruption, said: “This is a watershed moment for political donations in the UK which is fraught with risk.

“It is not clear that either political parties themselves or the Electoral Commission have the expertise and knowhow to prevent anonymous crypto donations from illegal donors. It leaves the UK extremely vulnerable to interference from hostile foreign powers and even organised crime gangs.

“New interim rules from the Electoral Commission should be brought forward urgently that establish some clear safeguards, and the forthcoming elections bill must introduce a complete ban on crypto donations.”

Veteran Labour MP Liam Byrne is organising a cross-party campaign to demand a total ban on crypto in political donations.

A spokesperson for the Electoral Commission said: “To date, no political party has reported any donations that they have identified as cryptocurrency. Political parties … are required to report donations and loans over £11,180 to us on a quarterly basis… We do not routinely share details of unpublished donations before quarterly publications.”

Photograph by Ian Maule/Getty Images