U.K. Prime Minister Keir Starmer said Wednesday the government will move to pause cryptocurrency donations to political parties, framing the step as a response to growing risks around illicit finance and foreign interference.

Speaking during Prime Minister’s Questions, Starmer said the government would introduce "a moratorium on all political donations made through cryptocurrencies" as part of a broader push to safeguard the country’s democratic system.

"We will act decisively to protect our democracy," Starmer told MPs, pointing to a government-commissioned review that warned of "stark threats posed by illicit finance."

Temporary pause for crypto donations

The proposal follows recommendations from a review led by former senior civil servant Philip Rycroft, which called for a temporary halt on crypto donations until regulators can ensure greater transparency.

The moratorium is not intended to be permanent, but rather a stopgap while rules catch up with the technology, according to the report.

Under the plan, political parties would be required to return any crypto donations received once the rules take effect, with potential criminal penalties for non-compliance after a grace period. The review flagged concerns that cryptocurrency transactions can obscure the origin of funds, making it harder to enforce existing donation rules or identify foreign sources.

The issue has increasingly become a political flashpoint in the U.K., particularly after the Reform UK party took in tens of millions of pounds worth of crypto donations.

Tensions have been building for weeks. A cross-party group of lawmakers earlier this month urged an “immediate ban” on crypto political donations, calling them an “unacceptably high risk” to electoral integrity.

This all comes as the U.K. continues to flesh out its wider crypto regulatory framework, including rules for stablecoins, trading platforms, and custody.