A former Labour minister has added her voice to those of a growing list of experts and senior MPs calling for a ban on political donations in cryptocurrency as concerns grow over foreign interference in British elections.
Rushanara Ali, the Labour MP who helped draft the elections bill when she was a minister in the communities department, called for the government to strengthen the legislation with an outright ban on donations in digital currencies.
Ali is planning to intervene when the bill comes back in front of MPs on Monday, as ministers admit they will need to go further to prevent foreign interference in a number of ways.
“The enemies of democracy are constantly looking at new ways to undermine our system,” Ali said. “I urge ministers to go further to block the use of cryptocurrencies to funnel money into British politics.
“Unless action is taken now, the threat of foreign interference in our democracy will grow. The government must include an amendment to this bill to close this loophole.”
She will tell the Commons on Monday: “Cryptocurrency offers a number of ways to circumvent donation laws – including by using multiple crypto wallets with different addresses, or fragmenting large donations into smaller amounts via crowdfunding to bypass the reporting threshold, and offering anonymity through the use of privacy coins.
“Ireland, Brazil and several states in the USA all have bans on cryptocurrency donations.”
Cryptocurrency is a form of digital money that allows the sender to hide their identity, leading to concerns that foreign groups could use it to circumvent British rules against accepting donations from abroad.
Philip Rycroft, a former senior civil servant, is leading a review into the government’s policies on illicit foreign money in British politics, but that review was not finished in time for the results to be included in the elections bill.
Ali resigned from government last year after it emerged she evicted four tenants from a property she owns then re-let it weeks later for £700 more a month.
Since then, concern over foreign interference in UK politics has grown, not least with the conviction of Nathan Gill, the former Reform UK leader in Wales, who was jailed for more than 10 years after admitting to taking bribes for pro-Russia interviews and speeches.
Reform became the first UK party to accept cryptocurrency contributions last year. The party has set up its own crypto portal to receive contributions, saying they will be subject to “enhanced” checks.
In January, seven Labour MPs who chair parliamentary committees – including the heads of the foreign, defence and international security committees – called on the government to ban crypto donations.
The campaign group Spotlight on Corruption has said hostile states, such as Russia, are using cryptocurrency to undermine democracies around the world.
Government sources say ministers are also looking at ways to do more to stop foreign countries using social media to spread misinformation and disinformation, including forcing platforms to slow down their algorithms when false claims are going viral.
Those measures could be included in the elections bill at a later stage, or in legislation to follow the government’s consultation on banning social media for under-16s, which will be published next week.
A spokesperson for the communities department said: “Through our representation of the people [elections] bill we are fighting against the risk of foreign interference by strengthening rules around political donations.
“We have also commissioned an independent review, led by former permanent secretary Philip Rycroft, to explore how we can go even further to toughen up the safeguards in place against illicit money from abroad – including cryptocurrencies.”