The question was never whether innovation should be prevented — but whether sufficient transparency, oversight and resilience were yet in place to protect democratic integrity.
What is the Rycroft Review?
The Rycroft Review of Foreign Financial Interference was commissioned by the Government to examine how hostile states and malign actors are using financial channels — including cryptocurrency — to interfere in UK democratic life, and whether existing safeguards are sufficient to protect our political system.
As CFS at RUSI have identified, foreign powers have learned that "submitting a well-timed donation or funding an effective influence campaign can achieve what tanks and missiles cannot." The UK's own Intelligence and Security Committee has documented Russian, Chinese and Iranian interference in our democratic processes. In the last year alone, prosecuted cases of foreign interference have made clear this is not a theoretical risk — it is happening now.
Why cryptocurrency is a specific threat
Cryptocurrencies are becoming embedded in the mainstream financial system, yet they originate in an ecosystem committed to decentralisation, low control and anonymity. Without mandatory regulation of exchanges and wallet providers, the theoretical transparency of blockchain is meaningless — the paper trail leads nowhere.
Hostile regimes are already exploiting this. North Korea and Iran have used crypto to bypass traditional financial controls. Russia-linked actors have deployed stablecoins specifically to circumvent sanctions. Intelligence suggests Chinese services are exploring crypto to fund operations and pay British sources in ways that are deniable and difficult to trace.
As Neil Barnett of CFS at RUSI has warned: "Cryptocurrency is a great leap in money laundering technology. Without such defences, the UK's political system presents an open goal to foreign enemies."
Our central recommendation: a moratorium
Democratys calls on the Government to introduce a moratorium on political parties accepting cryptocurrency donations — implemented through the Representation of the People Bill — until a robust, trustworthy verification system is in place.
This is not a ban. We do not support an outright ban, which risks displacing the problem rather than solving it. As Tom Keatinge, Director of CFS at RUSI, told the Joint Committee on National Security and Intelligence: "A ban risks missing the wood for the trees. What we need is a moratorium until such time as we are sure that we have the right checks and balances in place."
A moratorium would press pause on our current exposure while the UK builds a world-leading system capable of managing the specific money-laundering and anonymity risks associated with crypto. It can be lifted — but only with the support of the Electoral Commission and an affirmative vote of Parliament.
What a trustworthy system looks like
Working with experts across law, regulation and national security — including the former Chief Executive of the Electoral Commission — Democratys has developed the principles for a verification system that would allow crypto donations to resume safely:
- All crypto donations must pass through UK-registered, FCA-supervised Virtual Asset Service Providers
- An independent third party holds donations in quarantine while full KYC and AML checks are conducted
- Anonymity and privacy coins are banned outright
- Once approved, donations are immediately converted to sterling and reported to the Electoral Commission in near real time
- A low reporting threshold (£0–100) prevents fragmentation and smurfing
Strengthening the Electoral Commission
Any new rules are only as effective as the body enforcing them. The Electoral Commission has been systematically weakened at the very moment when the complexity of crypto-linked risks is accelerating. Democratys is calling for enhanced powers, a dedicated Crypto Compliance Unit, restored independence from ministerial direction, and funding commensurate with the scale of the challenge.
The legislation
Democratys commissioned lawyers at Bates Wells — including a parliamentary agent — to draft legislative clauses for inclusion in the Representation of the People Bill. We submitted two options: a direct moratorium within PPERA 2000, and an enabling power allowing the Secretary of State to designate prohibited asset types by Order.
We are actively working to ensure these proposals are adopted as the Bill progresses through Parliament.
Our submission
Download our full submission to the Rycroft Review