Pause on cryptocurrency donations recommended in review of foreign interference

The Government should temporarily stop political parties being allowed to accept cryptocurrency donations, a review of foreign financial interference has recommended.

Former top civil servant Philip Rycroft urged ministers to legislate for a moratorium in its Representation of the People Bill going through Parliament.

This should be seen not as a “prelude to an outright and permanent ban” but an interlude for regulation to catch up to reality, he wrote in his report.

His recommendations come amid concerns that digital currencies could be used to hide where funding has come from.

Mr Rycroft also proposed an annual cap on donations from British voters living abroad and a ban on foreign-funded online political ads.

Attempts to use financial influence to infiltrate politics by gaining leverage and sowing division and distrust are not new but “arguably more acute”, Mr Rycroft noted.

He said he was “not pressing the panic button” but “ringing the alarm bell” on the issue and urged the Government to “act swiftly” on his recommendations. 

“The Government should legislate in the Representation of the People Bill to introduce a moratorium on political donations made in crypto assets,” he wrote.

Few parties accept crypto donations, but Reform UK is the most prominent to do so.

Speaking to reporters, Mr Rycroft said he had spoken to Nigel Farage’s party while compiling the report.

Asked about the prospect of Reform feeling targeted by the crypto recommendation, he said: “I wasn’t here to look out for the interests of any political party, I was here to look out for the interest of our democratic processes.”

The publication of Mr Rycroft’s report on Wednesday comes amid heightened fears about political meddling by hostile states.

The review was commissioned in December last year following a series of high-profile cases of attempts by foreign states to influence UK politics, including the jailing of Reform’s former Welsh leader Nathan Gill for taking bribes to make pro-Russian statements.

Mr Rycroft wrote in the report that “foreign interference in our politics is real and persistent”, with the UK a target for espionage from Russia, China and Iran.

He even pointed to the risk emanating from Donald Trump’s US.

He said: “Separately, beyond these hostile state threats, I am also cognisant of a potential new threat: an emerging willingness of foreign actors and private citizens, including from allies like the United States, to interfere in, and influence, politics abroad in pursuit of their own agenda.”

The UK is already experiencing “information warfare” and “our defences are worryingly weak,” Mr Rycroft warned.

His report said foreign actors are subverting the debate on social media “to exacerbate division and increase polarisation with a view simply to destroying the capacity of the UK to function as a well‑governed state”.

Fake accounts and bots “can push large quantities of disinformation,” representing “a new and relatively cheap way” for foreign states and non-state actors to interfere with the democratic process of other countries, Mr Rycroft noted.

“If relentless exposure to disinformation on social media persuades even a small proportion of the UK population that our politics is irretrievably broken, the risk grows rapidly that some will seek to resolve their discontents by extra-political action,” he wrote.

Liberal Democrats Cabinet spokeswoman Lisa Smart said: “Nathan Gill was happy to stuff his pockets with Russian bribes and it looks like Nigel Farage has shown no remorse whatsoever.

“Reform taking untraceable secretive crypto donations to fund their Trump-style politics here in the UK should never have been allowed.

“Farage must return all the crypto donations he’s received from anonymous overseas sources or admit he’s happy to let foreign sources of money poison our politics in the UK.”