Crypto World

UK Bans Crypto Donations to Political Parties, Citing Foreign Interference Risk

Published

4 weeks ago

25 March 2026

UK Bans Crypto Donations to Political Parties, Citing Foreign Interference Risk

An independent government review warned that crypto assets could channel foreign money into British politics.

The United Kingdom has imposed an immediate moratorium on all cryptocurrency donations to political parties, Prime Minister Keir Starmer announced on Wednesday.

The move follows the publication of the Rycroft Review, a 50-page independent assessment of foreign financial interference in UK politics led by former senior civil servant Philip Rycroft.

The government will legislate the moratorium through amendments to the Representation of the People Bill currently before Parliament, and the new rules will apply retrospectively to any crypto donations received from Wednesday onward, Communities Secretary Steve Reed confirmed in the House of Commons.

Why Crypto

The Rycroft Review cited a combination of concerns specific to crypto assets as the basis for its recommendation, including the incomplete regulatory framework for crypto — particularly at the international level — the difficulty of tracing ultimate ownership, the proliferation of different cryptoasset vehicles with varying degrees of traceability, and the emergence of AI-assisted technologies that can fragment crypto holdings into amounts small enough to fall below the £500 threshold at which political donations must be declared.

No crypto donations have reached the reporting threshold to date, according to the review, meaning the Electoral Commission has had no visibility into the scale of crypto flowing into party coffers.

The review framed the moratorium as a pause rather than a permanent prohibition. Rycroft wrote that the measure should be understood as an interval for the regulatory environment to catch up with the reality of cryptoassets, not a prelude to an outright ban. The legislation would include a mechanism to lift the moratorium once Parliament and the Electoral Commission are satisfied that adequate regulation is in place.

Rycroft also acknowledged that the ban is not a complete seal. Donors would still be able to convert crypto holdings to fiat and donate the proceeds, at which point traditional anti-money laundering checks would apply.

The UK Parliament’s Joint Committee on the National Security Strategy last month described crypto’s presence in UK politics as an unacceptably high risk to the integrity of the political finance system, and endorsed the review’s findings today.

Reform UK in the Crosshairs

The moratorium lands squarely on Nigel Farage’s Reform UK, the only major British party to actively court crypto donations. Reform became the first mainstream UK party to accept Bitcoin donations last year, and its largest donor — Thailand-based Christopher Harborne, a major Tether investor — has donated £12 million to the party over the past year, including a single £9 million contribution.

The Electoral Commission has said that Reform has not shared any crypto wallet addresses with the regulator, limiting the watchdog’s ability to independently verify the party’s crypto funding sources.

Reform UK MPs walked out of the House of Commons during Starmer’s announcement. The Prime Minister took a direct shot at Farage, telling MPs that there was only one party leader willing to say anything if paid to do so.

Broader Crackdown

The crypto moratorium is one of 17 recommendations in the Rycroft Review, which found that foreign interference in UK politics from Russia, China, and Iran is persistent and growing more acute. The review was triggered by the November 2025 conviction of Nathan Gill, Reform UK’s former leader in Wales, who was sentenced to more than 10 years for accepting Russian bribes.

Alongside the crypto ban, the government immediately adopted a £100,000 annual cap on political donations from British citizens living overseas. Rycroft also recommended limiting corporate donations to a party’s reported taxable profits — a measure aimed at closing a loophole that could allow foreign individuals to funnel money through UK-registered shell companies.

The Rycroft Review also warned of threats beyond direct political financing, noting that foreign-linked social media bots and disinformation campaigns represent a relatively cheap way for hostile states to interfere in democratic processes. Rycroft separately flagged what he called a potential new threat from allies like the United States, citing a willingness of foreign actors and private citizens to interfere in politics abroad in pursuit of their own agenda.

This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.

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Crypto World

LayerZero Says Kelp Setup Caused Exploit, as Aave Loss Questions Mount

Published

2 minutes ago

20 April 2026

NewsAdmin

LayerZero Says Kelp Setup Caused Exploit, as Aave Loss Questions Mount

Interoperability protocol LayerZero claims that an inadequate setup tied to Kelp’s decentralized verifier network (DVN) enabled malicious actors to steal $290 million from Kelp DAO, adding that preliminary signs point to North Korea-linked threat actors.

An attacker drained about 116,500 Restaked ETH (rsETH), worth as much as $293 million at the time, from Kelp DAO’s LayerZero-powered rsETH bridge on Saturday.

LayerZero said Monday that the exploit stemmed from a single point of failure in Kelp’s setup, which relied on a single LayerZero DVN as the only verified path, despite LayerZero previously advising them against this.

“LayerZero and other external parties previously communicated best practices around DVN diversification to KelpDAO. Despite these recommendations, KelpDAO chose to utilize a 1/1 DVN configuration.”

In practice, that meant Kelp relied on a single verification path for cross-chain messages rather than requiring multiple independent checks.

The exploit quickly shifted attention from the technical cause to the question of who should absorb the losses, while the fallout spread into Aave, where the attacker used rsETH as collateral to borrow real liquidity.

Aave’s total value locked (TVL) had fallen by about $8.9 billion to $17.5 billion at the time of writing after the exploiter used the stolen funds to borrow on Aave, leaving about $195 million in “bad debt,” triggering withdrawals on the lending protocol.

LayerZero said Kelp’s rsETH bridge relied solely on the LayerZero Labs DVN, and argued that the incident reflected an unsafe application configuration rather than a compromise of LayerZero itself. The company said it is now urging all applications using 1/1 DVN setups to migrate to multi-DVN configurations and will stop signing or attesting messages for apps that retain the single verifier design.

Losses spark blame fight after $290 million Kelp exploit

With no recovery or compensation plan yet announced, users and market observers spent Monday debating whether losses should sit with Kelp DAO, LayerZero, Aave or rsETH holders themselves.

Yishi Wang, founder and CEO of open-source hardware wallet OneKey, said that the best path forward was to negotiate with the hacker, offer a 10% to 15% bounty, and get the bulk of the funds back.

“If negotiations fail, LayerZero’s ecosystem fund should foot the bulk of the bill—it’s got the deepest pockets and the most long-term skin in the game,” wrote the founder in a Monday X post, adding that Kelp DAO is “broke” and could make it up with tokens and future revenue, or consider selling the project.

Analytics platform DeFiLlama’s pseudonymous founder, 0xngmi, outlined three solutions, including the option to “socialize” losses among all users, “rug rsETH holders on L2s,” or try to return holder balances to a pre-hack snapshot, which would be “very hard to do,” he wrote in a Monday X post.

Cointelegraph reached out to Aave for comment, but had not received a response by publication.

Exploit raises Aave liquidation risks

Investor concerns about the Kelp exploit have significantly reduced Ether (ETH) liquidity on Aave, the lending protocol’s core collateral asset.

This low liquidity presents a “critical safety risk where liquidations of ETH collateral cannot take place while markets are at 100% utilization,” said MoneySupply, the pseudonymous head of strategy at Aave competitor lending protocol Spark, in a Saturday X post.

“With current illiquidity conditions on Aave, a 15-20% ETHUSD price drop could cause significant bad debt accumulation (on top of any potential issues attributable to the direct rsETH exploit),” he said.