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The UK political sphere is forging a new front in digital finance regulation by introducing a powerful bill that would completely ban cryptocurrency donations to political parties, aiming to block the inflow of dark money from foreign forces seeking to threaten national security and interfere in elections.
According to investment outlet FX Leaders on February 26 (local time), the bill, led by Matt Western, chair of the UK’s Joint Committee on the National Security Strategy, amounts to a direct declaration of war against the growing threat posed by hostile states attempting to covertly influence British policy using the deep anonymity of blockchain technology as a weapon. Western strongly criticized the absence of a national enforcement body to control digital assets, calling it a critical security loophole at a time when the UK’s military role in Europe is expanding and geopolitical tensions have reached a peak.
The proposed regulatory overhaul, dubbed the “Western proposal,” includes robust safeguards to thoroughly control the flow of digital assets into the political funding ecosystem. At its core, it mandates that cryptocurrency donations be fully converted into U.S. dollars within 48 hours of receipt, preemptively blocking the risk of extreme volatility in asset values caused by policy changes. The use of mixers, which are often employed to obscure the source of funds, would also be completely banned after being identified as a primary channel for malicious foreign capital.
In addition, political parties would be permitted to process donations only through virtual asset service providers officially registered with the Financial Conduct Authority, and a strict Know Your Customer system would be introduced to verify that donors are legitimate voters actually residing in the UK. This represents a markedly conservative approach in sharp contrast to the more inclusive stance in the United States, where prominent political figures, including former President Donald Trump, actively utilized cryptocurrency as a legitimate fundraising tool during the 2024 election period.
Within the UK Parliament, the Reform Party previously took a progressive step by becoming the first to accept cryptocurrency while introducing its own rule banning anonymous donations above approximately $630. However, the committee’s sober assessment is that without clear guidance from the Electoral Commission, such measures are insufficient to prevent the sophisticated inflow of illicit funds. While some argue that a temporary ban unfairly suppresses technology-friendly political forces, growing voices insist on applying a zero-tolerance principle to illegal funding interventions by increasingly sophisticated foreign intelligence agencies, including significantly raising existing fines.
Ultimately, while the ban may represent a painful setback for the cryptocurrency industry, it also signifies recognition that digital assets can serve as powerful instruments directly affecting democracy and national security. Establishing airtight control mechanisms that prioritize strict regulatory compliance is seen as an unavoidable demand of the times and an essential growing pain that the cryptocurrency ecosystem must endure to emerge as legitimate mainstream capital in the global market.
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