Cryptocurrency Q&A

Two Experts Answered My Questions

I hope that you’ve read the main article that this piece references, but if you’ve found yourself here first … click here to catch up. 👇

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I think I’ll copy and paste the questions and responses from each contributor instead of paraphrasing. That way it allows you to make your own assertions and form your own opinions without me trying to sway things.

Firstly, here’s the email I sent to both of my excellent collaborators.

My burning crypto questions.

As I mentioned, David Kemmerer got back to me first so we’ll begin there. Here’s his email back to me with his précis of my questions.

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David Kemmerer — Co-Founder & CEO of CoinLedger

How can we know, for sure, that money donated comes from the UK? The processor is in Poland so money/BTC etc. is being immediately routed away from the country. Without transparency in the blockchain, surely that money becomes anonymised instantly?

You are right, Radom acts as the payment gateway. Think of it as the Stripe of Crypto. The location of the processor, however, doesn’t determine transparency or legality. It is the onboarding process that matters.

For a UK party like Reform UK to remain legal, they (in this case, through Radom) must perform Know Your Customer. According to recent filings, Radom uses Sumsub to require a photo ID and a liveness selfie. Besides checking if you have a UK passport, they cross-reference the data against the UK electoral register. If the data doesn’t match a permissible donor, the transaction is rejected.

Since Radom follows MiCA, they are barred from supporting privacy coins such as Monero. A reason why Reform UK can claim its channel is clean.

Routing Away

You brought across a common myth, routing away. Even if the processor is in Poland, the blockchain records the transaction globally. The money doesn’t disappear into Poland. It moves from your wallet to a wallet controlled by the party or their processor. Anonymity is only there if the party ignores these checks. For a major political entity, it would lead to a massive fine from the Electoral Commission.

How easy is it to obfuscate transactions throughout the blockchain? The use of tumblers and mixers seems to make it nigh on impossible. Is this the digital version of laundering cash?

You mentioned tracing a transaction and hitting a wall. It is a very common experience for beginners. Mixers and tumblers are the digital equivalent of a cash spin in a laundry. They take your coins, pool them with thousands of others and spit clean ones to a new address.

A beginner using Free Explorer, e.g., mempool.space, a mixer looks like a dead end. Try using specialized firms such as Chainalysis or TRM Labs. They use sophisticated algorithms that accurately demix these transactions.

Currently, the UK Electoral Commission treats crypto as non-monetary donations. A dishonest person might try to use a series of peel chains- splitting one big transaction into hundreds of tiny ones. They do these to hide the source. Luckily, most regulated processors automatically flag any funds from known mixing services.

Are users mandated to tie their personal details to a wallet or transaction, or can they choose to remain anonymous?

On crypto networks, say Bitcoin, no one asks for your name. You are a string of alphanumeric characters. The moment you want to interact with a regulated entity, e.g., a bank or political party, you must de-anonymize.

In the UK, you cannot donate more than £500 to a central political party without a statutory identity check. The limit is much lower, £50, for local candidates. Any attempt to send crypto without going through the KYC portal leaves the party legally obligated to return or forfeit it.

The security of the blockchain appears to be solid, but would it be possible to ‘steal’ coins from other users?

An easy way to answer is that blockchain is unhackable but the users are. No one has ever hacked the Bitcoin blockchain to create money or move someone else’s coins. Theft results from phishing and compromised private keys.

If a user is tricked into sharing their private key, it is not a hack. In more complex systems, like Ethereum, a programmer might choose to write a vault with a flaw in the code and someone might drain it. This is also exploitation and not stealing from a wallet.

Is it at all possible to ‘regulate’ the crypto donations to political parties?

The UK doesn’t have bespoke rules for crypto donations. In fact, the Electoral Commission admitted it lacks the technical capacity and resources to trace pseudonymous transactions across borders.

Philip Rycroft is scheduled to deliver his final recommendations to the government by the end of March 2026. They were reviewing whether to ban crypto donations or mandate that they only go through UK-regulated exchanges. Yesterday, the government stated that the Bill will be amended to include crypto-specific restrictions once Philip Rycroft finishes his report.

It seems to me that, if they were so inclined, an unscrupulous person could send money from a foreign country via a series of intermediaries that would then become effectively untraceable to the initial source. Is that the reality?

Yes, an unscrupulous and determined person might do this, although it is getting harder. They would have to use different methods and a chain of foreign intermediaries. It is possible because the laws are reactive, fighting a high-speed algorithmic war with a documented rulebook. The best solution is to force political parties to use providers like Radom that refuse to accept coins from mixers or privacy-enhanced wallets.

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Andrew Nalichaev — Blockchain Expert @ innowise

“How can we know for sure the donation comes from the UK?”

A blockchain transaction does not contain geography. It records that value moved from one address to another, and when. It does not reliably tell you whether the person was physically in the UK, or even which country they are a resident of.

So “UK-ness” is usually enforced off-chain, via:

• Donor identification + permissibility checks (e.g., electoral register / residency / corporate eligibility), and

• AML screening (sanctions, stolen funds, high-risk sources, etc.)

The UK Electoral Commission’s guidance is explicit that donations in cryptoassets are not prohibited, but they create “particular challenges and risks” for identifying donors and checking permissibility — and recipients must collect enough information to identify donors and must not accept anonymous donations.

On the specific processor you mentioned: in written evidence submitted to a UK parliamentary committee, Radom is described as providing the infrastructure for Reform UK’s crypto donations and conducting KYC/permissibility checks, including ID/selfie verification and electoral register checks, plus AML screening via a compliance provider and detection of mixers/smurfing.

(That doesn’t “prove” every edge case is solved — but it shows the intended compliance model is not “anonymous wallets with no checks”.)

Also, a subtle point: crypto isn’t “routed out of the country” in the same way bank transfers are. The ledger is global; what matters for regulation is who the donor is and whether the party can evidence permissibility, not the physical location of nodes or a payment page.

If the blockchain is transparent, why did tracing become impossible?”

What you experienced is very common. Two reasons:

• Address ≠ person. One entity can control many addresses.

• Modern transaction patterns explode into graphs. Funds can be split, merged, and moved through exchanges/DeFi, which quickly becomes a network-analysis problem, not a simple “follow the money” line.

This is why investigators use graph/forensics tooling rather than basic explorers. If you want a more visual way to follow flows (especially for journalism-level investigation), tools like MetaSleuth (multi-chain) and Bloxy (Ethereum-only) can make the “graph” legible. (They won’t magically deanonymise someone, but they drastically reduce the “impossible after two steps” feeling.)

“How easy is it to obfuscate — is this digital cash laundering?”

Obfuscation is possible, but it’s not “free invisibility.”

Mechanisms like mixers can make attribution harder, but they create another problem: taint/risk flags. The Electoral Commission guidance literally warns recipients to be cautious if donors use mixers or other systems to split donations.

And the committee evidence I mentioned says Radom screens for sanctioned addresses, stolen funds, and can detect mixers/smurfing and apply risk scoring or return/hold funds.

So yes — conceptually it can resemble laundering cash (breaking the link between origin and destination). But in practice, the moment you want to convert to fiat, use a major exchange, or interact with regulated rails, flagged provenance becomes a serious constraint.

“Are users mandated to tie personal details to a wallet?”

At the blockchain layer: no. Public blockchains typically operate on pseudonymous addresses (public keys). There is no built-in notion of “name, passport, address.”

But at the ecosystem layer: often yes, when regulated services are involved:

• Centralised exchanges,

• Fiat on/off ramps,

• Payment processors handling donations,

• And (in the political context) the recipient’s legal obligation to identify donors and reject anonymous/impermissible sources.

There are also newer identity approaches (including zero-knowledge proofs) that can let someone prove eligibility without revealing everything publicly — but that’s a separate, emerging area.

“Can someone steal coins from other users?”

Not by “hacking the blockchain” in the usual sense. In most real-world cases, theft happens through:

• Private key / seed phrase compromise (phishing, malware, SIM swap, social engineering),

• Signing a malicious transaction (approving a smart-contract drain),

• Hacks of custodians (exchanges/wallet services),

• Smart contract vulnerabilities (for tokens/apps), rather than breaking the underlying ledger.

So the base cryptography/consensus is strong, but users can still lose funds through operational security failures.

“Can crypto donations to parties be regulated — and can foreign actors still hide?”

Regulation is possible, but it tends to rely on:

• Mandatory donor identification / permissibility checks, and

• Requiring donations to go through compliant, auditable rails.

UK institutions are actively focused on this topic. A House of Commons Library briefing notes crypto donations are not banned, but highlights the foreign-interference risk and the government review into whether safeguards are sufficient.

However, your “reality check” is fair: a determined actor with time/resources can attempt to route value through intermediaries to reduce traceability. Whether they succeed depends on whether they ever touch a chokepoint where identity is known (KYC exchange, payment processor, regulated service). If they do, attribution can become “just paperwork + warrants.” If they don’t, it can become significantly harder — though large, unusual flows often still attract specialist attention.

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Head back to the main article now for my final thoughts after reading these illuminating emails.

Click here for Part One of this Choose Your Own Adventure article.

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