UK Labour MPs push for permanent crypto donation ban after Farage resignation

UK Labour MPs have proposed making a temporary ban on cryptocurrency donations to political parties permanent after Nigel Farage resigned amid investigations into multimillion-pound gifts linked to crypto industry figures.

The Guardian reported on Thursday that members of the ruling Labour Party have tabled amendments to existing political donation rules that would permanently prohibit digital asset donations after a temporary moratorium introduced in March.

Labour MP Liam Byrne, who chairs the business select committee, said the proposed changes are intended to strengthen safeguards against political influence from wealthy donors. Referring to what he described as the growth of a political and media network backed by large sums of money, Byrne argued that the UK could not allow its existing protections to weaken further.

UK lawmakers are expected to consider the proposed amendments next week as scrutiny surrounding Farage’s financial declarations continues.

Resignation brings crypto donations back into focus

Earlier this week, Farage resigned as the Member of Parliament for Clacton after confirming that Parliament’s standards commissioner is investigating gifts he received from crypto billionaire Christopher Harborne and longtime adviser George Cottrell.

During an X livestream on Tuesday, Farage said he had “done nothing wrong” and announced he would contest the resulting by-election so voters in Clacton could decide whether he should continue representing them. According to his remarks, Harborne’s multimillion-pound payment was an unconditional personal gift intended to cover security costs following threats against him.

Nigel Farage during the X livestream. Source: X/Nigel Farage

The Guardian reported that the donations under scrutiny include a gift valued at roughly $6.7 million from Harborne, along with staff, security, transport and accommodation provided by Cottrell, who has a previous U.S. wire fraud conviction and has been linked to crypto casino Tether.bet.

Earlier reporting by The Sunday Times said Farage did not publicly declare much of the support provided by Cottrell. Farage rejected those allegations, saying the benefits were received before he entered Parliament after the 2024 general election and therefore did not fall under parliamentary disclosure rules.

His resignation automatically triggered a by-election in Clacton. According to The Guardian, Labour, the Conservatives, the Liberal Democrats and the Green Party are not expected to field candidates, while Prime Minister Keir Starmer described Farage’s decision as a “desperate stunt.”

Leadership contest could shape crypto policy

Alongside the debate over political donations, the Labour Party has begun selecting a successor to Starmer following his resignation as prime minister.

The Guardian reported that Andy Burnham, who recently returned to Parliament after winning a by-election in Makerfield, is expected to become Labour’s next leader if he secures enough nominations from party MPs. As mayor of Greater Manchester, Burnham previously backed plans to turn the city into a “Web3 powerhouse” and supported the use of digital technology to drive economic development.

If elected leader, Burnham could play a role in future decisions on the proposed crypto donation ban as well as the Financial Conduct Authority’s oversight of the UK’s digital asset sector.