Canada’s federal government has proposed a total ban on cryptocurrency donations to political parties, citing concerns that foreign entities could exploit the technology to interfere in elections.

Known as the Strong and Free Elections Act, the bill was introduced on Thursday and proposes to amend the Canada Elections Act to prohibit political parties and third parties involved in the election process from accepting donations in crypto, money orders and prepaid cards to prevent anonymous and “hard to trace contributions.”

The bill's sponsor, Steven MacKinnon, the government House leader, said in an X statement on Thursday that the measures are intended to block foreign interference and other threats to elections.

“With the introduction of the Strong and Free Elections Act, new investments to counter foreign threats and stronger government coordination, we are acting to ensure our elections remain free, fair and secure at all times,” he said.

Canada is not alone in its concerns. The UK government also announced plans for a moratorium on crypto donations on Thursday, following an independent review and pressure from senior politicians.

First attempt at banning crypto donations failed

The current Strong and Free Elections Act had its first reading in the House of Commons on Thursday. To become law, it must progress through several readings and a committee stage in that chamber, then pass through the Senate before reaching the Governor General of Canada for royal assent.

A similar bill was proposed in 2024 by Dominic LeBlanc, then minister of public safety, but it failed to advance past the second reading in the House of Commons and ultimately died.

Crypto political donations in Canada have been permitted since 2019 and are treated similarly to property donations. 

However, a 2024 report by Stéphane Perrault, the chief electoral officer, recommended a ban on crypto political donations altogether on the grounds that it “poses challenges in identifying a contributor.”

Penalties could be up to twice the amount contributed

If the proposed legislation becomes law, contributions made using any of the banned payment methods must be returned, destroyed or delivered to the chief electoral officer. 

Penalties for violations could include up to twice the amount contributed, plus $25,000 for individuals and $100,000 for corporate entities.

The bill also proposes expanding existing bans on realistic deepfakes that impersonate electoral candidates to mislead voters. The issue gained attention in the lead-up to the 2024 US elections, with one reported case involving a deepfake of then-President Biden urging voters not to participate.