Canada Moves to Ban Crypto Donations – Before It Becomes a Problem

Canada is implementing a ban on cryptocurrency donations to political campaigns, a proactive measure driven by concerns over the intersection of digital assets and democratic processes, despite minimal actual usage of such donations in past elections. The move, part of the Strong and Free Elections Act (C-25), prohibits contributions made in bitcoin and other digital assets, classifying them alongside hard-to-trace instruments like money orders.

Regulatory Rationale and Historical Context

While technically permitted since 2019 under a framework treating crypto as non-monetary contributions, significant disincentives were in place. These included the ineligibility for tax receipts, mandatory public identification for donors exceeding $200, exclusion of privacy coins, and the requirement to liquidate holdings into fiat currency. Despite these measures, Canada's Chief Electoral Officer recommended tighter rules, eventually shifting from regulation to prohibition due to the fundamental difficulty in identifying contributors with pseudo-anonymous cryptocurrencies.

Bill C-25 represents the second legislative attempt to enact these stricter rules, following the demise of its predecessor, Bill C-65.

International Comparisons: UK and US Approaches

The United Kingdom has also taken action, with Prime Minister Keir Starmer announcing an immediate moratorium on cryptocurrency donations. Unlike Canada's preventative ban, the UK's decision stems from a documented threat, following a criminal conviction linked to foreign interference in political financing. The UK's ban is framed as a temporary pause, intended to allow for the development of verification frameworks capable of tracing digital funds. Alongside the crypto ban, the UK introduced a £100,000 annual cap on donations from citizens living abroad.

In contrast, the United States saw the crypto industry raise over $245 million during the 2024 election cycle. This significant funding, primarily from corporate treasuries and individual contributors, was used to support candidates favorable to lighter-touch crypto regulation, resulting in a more crypto-friendly Congress and the advancement of stalled legislation.

Divergent Global Strategies

The differing approaches of Canada, the UK, and the US highlight distinct answers to the question of cryptocurrency's role in political financing. Canada opts for a complete ban based on theoretical risk, the UK seeks a temporary halt pending robust oversight, and the US has effectively embraced crypto participation, significantly influencing its legislative landscape. As digital assets become more integrated into mainstream finance, the question of their involvement in political funding is expected to grow in prominence, with Canada and the UK drawing early lines while the US has already moved past them.