The UK government has announced plans to ban cryptocurrency donations to political parties and introduce a cap on contributions from British citizens living overseas, following an independent review into alleged foreign financial interference in British politics.

Prime Minister Keir Starmer confirmed the measures in response to a review led by former senior civil servant Philip Rycroft, which looked at the risks posed by foreign bad actors seeking to influence the UK’s democratic processes.

The review came on the back of a number of high-profile cases, including the conviction of former Reform UK MEP Nathan Gill for taking bribes to promote pro-Russian narratives.

Under the proposed changes, donations made in cryptocurrency will be banned, with ministers citing concerns over transparency and traceability.

In a statement to MPs, Housing Secretary Steve Reed said he accepted Rycroft’s assessment “that the anonymity inherent in crypto transactions could make it easier to mask the origin of donations and evade robust checks on the true source of funds”.

“The clear route that this creates for the illicit channelling of money into our politics is unacceptable and undermines public confidence in our electoral system,” Reed said.

He added that the ban on crypto donations would “remain in place until the Electoral Commission and this Parliament are satisfied there is sufficient regulation in place”, describing the measure as a temporary moratorium. The restriction will apply retrospectively to crypto donations of any amount from the date of implementation, once legislative changes are made.

The decision is particularly relevant to Reform UK, which is currently the only Westminster party known to have accepted cryptocurrency donations. Party leader Nigel Farage announced in May last year that Reform UK would accept donations in Bitcoin, and later confirmed the party had already received a “couple” of such contributions. The party’s website states that it does not accept anonymous donations and that any contributions above £500 are subject to checks.

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Electoral Commission data shows Reform UK received a record £9m donation from cryptocurrency investor and aviation entrepreneur Christopher Harborne, the largest single donation ever made by a living individual to a British political party.

Alongside the crypto ban, the government will introduce a cap on donations from British citizens living abroad, limiting contributions to £100,000 per year. Reed said the change would take immediate effect, with political parties given 30 days to return any donations exceeding the threshold once the rules are in force. After that period, criminal penalties will apply.

The cap will apply across all UK elections, including upcoming English local elections, Scottish Parliament elections and Senedd elections.