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Unlock Democracy says there must be a guaranteed way of tracing crypto donations back to their original source
Campaigners have welcomed the government’s moratorium on cryptocurrency donations, but warn that it may need to stay in place “indefinitely”.
The government announced an immediate pause on crypto donations yesterday following the publication of the Rycroft Review into foreign interference in UK politics.
Tom Brake, chief executive of Unlock Democracy, told Left Foot Forward that the democratic reform group supports the moratorium, but “if the moratorium is lifted, it must be very clear at that point that crypto donations can be traced back to their original source”.
Brake added: “Given the way that crypto is structured it is going to be very challenging to find a guaranteed way of tracing those donations back to their original source.”
According to reporting by the Observer, Reform UK has been converting cryptocurrency donations into cash before they reach the party’s accounts, thereby obscuring the original source of the funding.
Brake said he hopes the pause on cryptodonations will prevent this from happening. He added that he would want to know that the Electoral Commission is “satisfied that they have the means of investigating donations, particularly of crypto converted into cash”.
“If they don’t think they’ve got the means of investigating it, then the government should maintain the moratorium, if necessary, indefinitely,” he added.
The government will also adopt Phillip Rycroft’s recommendation to cap donations from overseas voters at £100,000 a year.
This is a major blow to Reform UK, which has received donations of £9 million and £3 million from Thailand-based crypto investor Christopher Harborne in just the past few months alone.
However, Executive Director of Spotlight on Corruption, Susan Hawley, said donation caps should apply to UK donors too.
She said that Rycroft “recommends that donation caps only apply to people abroad – but there’s no good reason the cap shouldn’t also apply to people in the UK. This critical loophole must be closed”.
Steve Goodrich, Head of Research and Investigations, at Transparency International UK also said: ”Big money from a UK-based mega-donor poses the same risk to the integrity of our politics as from one based overseas. Ministers should cap donations from all donors, not just those living abroad.”
Brake said that “large donations buy influence”, whether they’re from a UK voter or one based abroad.
Unlock Democracy supports imposing a cap on donations of £50,000 per donor per year by 2030.
Brake said that the Conservatives, Reform, Labour and the Lib Dems are all becoming “increasingly reliant on large donations”.
He argued that these parties would need a transition period to switch “from trying to raise multimillion pound donations from a small number of donors to raising millions of donations from small donors”.
Olivia Barber is a reporter at Left Foot Forward
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