When Nigel Farage unveiled a new donations page for Reform UK earlier this year, it was pitched as a statement of intent. Supporters were invited to back the insurgent party not only with pounds but with bitcoin and other digital tokens, framed as a modern, borderless way for “ordinary people” to fuel a political revolt.

Now that experiment has placed Reform at the centre of a looming crackdown. Ministers in the Labour government are drawing up plans to ban political donations made in cryptocurrency altogether, arguing that the technology’s promise of speed and flexibility comes with risks to the integrity of British elections that existing rules cannot reliably manage.

According to government and regulatory sources, the aim is to close off a potential new route for foreign and illicit money into UK politics by prohibiting parties, candidates and campaign groups from accepting cryptoassets at all. The proposed ban will not be ready in time for the wide‑ranging Elections Bill due early next year, which will instead focus on lowering the voting age to 16 and tightening existing donation loopholes. But officials describe the move against crypto as a clear direction of travel, to be delivered through separate legislation once the technical detail has been worked through.

At present, UK law does not treat digital tokens as a special case. Under the Political Parties, Elections and Referendums Act 2000, any donation over £500 – whether cash, a work of art or a quantity of bitcoin – must come from a “permissible” source such as a registered UK voter or a British‑based company that is genuinely trading here. Anonymous gifts above that threshold must be turned down. Electoral Commission guidance updated late last year explicitly says crypto should be handled like any other non‑cash asset, with parties responsible for checking the donor’s status and recording a fair market value.

In practice, however, regulators have become steadily more uneasy. Vijay Rangarajan, chief executive of the Electoral Commission, told a parliamentary committee this autumn that while movements on public blockchains can be traced from wallet to wallet, working out who actually controls those wallets – especially when they are based overseas or use privacy tools – is often extremely difficult. He warned that fully unpicking complex chains of crypto transactions could require resources only realistic in the most serious investigations, leaving the system exposed to abuse through smaller, less visible donations.

That assessment has strengthened the hand of campaign and anti‑corruption groups that have been warning for months that, without a ban, cryptocurrencies could become a new frontier for “dark money”. Spotlight on Corruption has described crypto donations under current rules as “extremely high risk”, arguing that hostile foreign states and organised crime groups already use digital assets to move funds across borders and could readily adapt those methods to party finance. Transparency International UK has likewise stressed that while parties may record a named donor, they may have no reliable way to know whether that individual is the true source of funds channelled through a series of wallets.

National security concerns form much of the backdrop. A recent risk assessment by UK authorities highlighted cryptoassets as an increasing tool for money laundering and terrorist financing, citing their pseudonymous nature and global reach. Briefings to MPs and peers have drawn on US intelligence assessments that Russia has spent hundreds of millions of dollars attempting to influence political processes abroad, often through opaque financial structures that now include digital currencies. Domestically, a string of high‑profile crypto fraud cases and a major seizure of bitcoin linked to criminal networks have reinforced the perception that digital assets are deeply enmeshed in serious economic crime.

Inside government, senior Labour figures have been signalling a tougher line since the summer. Pat McFadden, then a Cabinet Office minister and close ally of Keir Starmer, told MPs there was a strong case for at least considering a ban on crypto donations so that voters could be confident about who is funding politics. Liam Byrne, who chairs the Business and Trade Committee, has gone further, portraying cryptocurrencies as almost tailor‑made for those who want to hide the origin of political money and arguing for an outright prohibition as part of a broader clean‑up of party finance.

Reform UK has the most immediate skin in the game. The party was the first in Britain to open a dedicated crypto donations portal, casting it as proof that it stands with innovators and younger voters and against what Farage calls the “debanking” of controversial voices. He has said the party has already started to receive reportable sums in digital assets, though it has yet to disclose how large a share of its income they represent. A ban would not cripple Reform financially, but it would remove a key symbolic plank of its claim to be more modern and more radical than the established parties.

Not everyone in the crypto world accepts the government’s diagnosis. Industry bodies have argued in evidence to Parliament that the transparency of many blockchains makes them in some ways easier to police than cash, provided parties are required to use regulated exchanges and payment processors that carry out robust identity checks. They warn that an outright ban would send a hostile signal to a sector the government also says it wants to nurture, and suggest that tighter regulation and better enforcement would be a more proportionate response.

Ministers, regulators and campaigners are also watching developments overseas. Ireland and Brazil have already moved to forbid cryptocurrency donations to political campaigns, and EU and US authorities are tightening anti‑money‑laundering and sanctions rules around anonymous digital transactions. Officials in London are studying those models as they weigh how broadly to define “cryptoassets” in any future law and whether to capture in‑kind contributions such as campaign services paid for in digital tokens.

For now, parties remain free to take crypto as long as they comply with existing donor checks. But with the government, the Electoral Commission and civil society groups increasingly aligned on the risks, the window for experimentation looks limited. The battle over bitcoin in British politics has become a proxy for a larger argument: how far a modern democracy should go to accommodate new forms of money when the price of innovation may be fresh ways to hide who is really footing the bill.