The UK’s Electoral Commission is planning to update its approach to crypto-based political financing, amid reports of the country’s first crypto donation to a major political party.
“We will be updating our guidance on crypto donations shortly, ”a spokesperson for the regulator told Decrypt, adding that, “The Commission continues to review and adapt the support we provide to parties and monitor the ways they accept donations.”
Reporting over the weekend indicated that Nigel Farage’s party Reform UK has received a donation in crypto, according to people familiar with the matter.
Neither the value of the donation nor the particular cryptocurrency used has been shared, although UK electoral law dictates that parties must notify the Electoral Commission if donations exceed £11,180 ($14,905).
According to the Electoral Commission the donation has not been officially declared, although The Observer reports that the regulator had received prior notice from Reform about the contribution, and that no rules had been broken in its receipt of the donation.
“To date, no political party has reported any donations that they have identified as cryptocurrency,” a spokesperson for the Electoral Commission told Decrypt. “We know that several parties are exploring accepting donations in cryptocurrency, and we have offered advice on the matter.”
Decrypt has reached out to Reform UK for comment and will update this article should they respond.
Reform UK and cryptocurrency
The donation comes as Reform leader and founder Nigel Farage courts funding from the cryptocurrency industry, having announced in May that his party would reduce tax on crypto-derived capital gains from 24% to 10%.
Farage has doubled down on such support in recent days, declaring at the Digital Asset Summit in London this week that he would be the UK crypto industry’s “champion.”
Some political campaigners have responded to reports of Reform’s crypto donation by voicing fears that it could open the floodgates to illicit campaign funding.
Speaking to The Observer, Spotlight on Corruption’s executive director, Susan Hawley, said that the donation is “a watershed moment” for the UK.
“It is not clear that either political parties themselves or the Electoral Commission have the expertise and know-how to prevent anonymous crypto donations from illegal donors,” she said. “It leaves the UK extremely vulnerable to interference from hostile foreign powers and even organised crime gangs.”
The donation to Reform also comes several months after an MP for the ruling Labour Party called for cryptocurrency donations to be banned, citing concerns over illicit financing.
Despite these concerns, crypto-based contributions do not fall foul of existing UK electoral law, according to Simon Steeden, a Partner at London-based legal firm Bates Wells.
“UK electoral law does not specifically contemplate cryptocurrency-based donations in any way,” he told Decrypt, noting that the main legislation on donations derives from 1983 and 2000 and has only been updated since then “in a piecemeal manner.”
According to Steeden, cryptocurrency has not yet been a focus of government electoral law reform, with the law currently taking no view as to the type of property gifted.
That said, donations worth more than £500 ($663) must come only from “permissible donors,” who should generally be based in the UK.
“Parties have to reject donations if they are unable to ascertain the identity of the donor (so that they can check they are permissible),” he explained. “In general parties must take ‘all reasonable steps’ to verify or ascertain the identity of the donor and whether they are permissible.”
Details of anonymous or impermissible donations have to be reported to the Electoral Commission, the UK’s electoral regulator, as do donations over £11,180 ($14,905).
The UK Government has declared its intention to reform electoral law, including an extension of the vote to 16 and 17 year olds, as well as a tightening of rules surrounding donations.
In combination with the Government’s planned electoral reforms, the Electoral Commission’s incoming changes would “close long-standing loopholes in electoral finance law,” the spokesperson said, thereby boosting transparency and rebuilding voter trust.