In a move to safeguard the integrity of democratic systems, seven senior Labour MPs are urging UK Prime Minister Keir Starmer to ban cryptocurrency donations ahead of the proposed elections bill. Their concerns are rooted in the traceability challenges and potential for foreign interference posed by digital currencies, which they argue threaten the transparency of political funding systems.
Cryptocurrency and Politics: A Rising Concern
The MPs, led by Labour’s Liam Byrne, submitted an open letter highlighting the risks associated with crypto donations. Byrne emphasized that cryptocurrency is “opaque, hard to trace, vulnerable to foreign interference, and a growing threat to democratic integrity.” The group has called on the government to address these vulnerabilities in the upcoming elections bill, before its expected passage. They urge preemptive action rather than waiting for broader recommendations.
Their plea follows the release of a 2022 U.S. intelligence report, which revealed that over $300 million in cryptocurrency and other financial mechanisms were used by Russia to influence elections globally. These disruptions emphasize the potential risk for similar issues to unfold in the UK without appropriate regulatory measures.
Current Crypto Donation Landscape in the UK
Under current UK election laws, cryptocurrency donations are legal as long as they meet the same requirements as traditional financial contributions. However, to date, only three political parties have publicly reported receiving crypto donations. This highlights the emerging, but limited, impact of digital assets in the political funding scene. Reform UK, for instance, recently confirmed receiving high-value donations, though not in cryptocurrency specifically.
Labour MPs, however, caution that the risk is not in the volume of donations today but in what could occur as crypto adoption expands further in the UK political infrastructure.
Policies on Foreign Political Funding Under Review
The issue arrives against the backdrop of an ongoing review on foreign political funding, expected to conclude in March. Led by Philip Rycroft, a former civil servant, the review aims to assess international funding practices and their implications for the UK’s democratic frameworks. Despite this, Labour MPs advocate for immediate government action to mitigate risks tied to digital currencies, rather than waiting for the review’s official recommendations.
As crypto continues to expand into new areas, from decentralized finance to political funding, regulatory measures remain paramount. The government has yet to confirm its stance on crypto donations or its inclusion in the upcoming elections bill.
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