Slashing foreign aid will lead to unrest, crises and threaten UK security, MPs warn government
The government’s decision to slash foreign aid will lead to unrest, further crises and threaten UK security, a group of cross-party MPs has warned.
A report by the International Development Committee found the decision in February to reduce aid to 0.3% of gross national income (GNI) by 2027/28 – coupled with the US cutting its aid budget – is having a severe impact.
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The foreign aid budget was cut to invest in defence from 0.5% of GNI, which was meant to be an interim reduction from 0.7% to cope with economic challenges caused by the pandemic.
Total aid spending is set to reduce from £14.1bn in 2024 to £9.4bn by 2028/29.
The committee, chaired by Labour MP Sarah Champion, said spending is being prioritised on humanitarian aid over development, which “builds long-term resilience and should lead to reducing the need for humanitarian aid”.
They said the international development minister, Baroness Chapman, has made it clear “the UK will remain a leading humanitarian actor”.
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But the committee said while they are glad those in “desperate need of aid will be prioritised, particularly in the regions of Ukraine, Gaza, and Sudan”, they are concerned about the long-term effect of pulling development aid.
“We are concerned that slashing development aid will continue to lead to unrest and further crises in the future, presenting a threat to UK security,” the MPs said.
David Lammy, when he was foreign secretary, on a visit to Chad to see how aid agencies are dealing with the humanitarian crisis. Pic: PA
Risk to UK’s national security
They said a reduction in foreign aid will have “devastating consequences across the world”.
The committee said it recognises an increase in defence spending is needed, but “to do this at the expense of the world’s most vulnerable undermines not only the UK’s soft power, but also its national security”.
They said the government must make “every effort” to return to spending 0.5% of GNI on foreign aid “at a minimum, as soon as possible”.
It is understood the government intends to return to spending 0.7% when the fiscal circumstances allow.
The committee also found long-term funding for development is “essential” to ensure value for money is achieved.
However, they accused the government of seeing value for money only in terms of the taxpayer, saying that downplays “equity and the importance of poverty reduction” and causes tension.
They agreed accountability to the taxpayer is “key to reducing poverty globally, and maximising the impact of each pound to do so, must remain the Foreign, Commonwealth and Development Office’s central tenet for official development assistance spending”.
A Foreign Office team member helping evacuees in Cyprus in 2023. File pic: Reuters
Spending on migrant hotels
Spending on migrant hotels in the UK was also criticised by the MPs, who said while international aid rules mean they can cover refugee hosting for the first 12 months in the UK, given the recent cuts, that is “incompatible with the spirit” of the UN’s OECD Development Assistance Committee rules.
“Excessive spend on hotel costs is not an effective use of development budget,” they said.
The committee recommended costs of housing refugees should be capped “at a fixed percentage” of total foreign aid spending “to protect a rapidly diminishing envelope of funding”.
Read more: Govt struggles to slash aid spent on asylum hotels
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‘Short-sighted’
Reacting to the report, Timothy Ingram, head of UK advocacy at WaterAid, said: “The UK government’s decision to cut the aid budget was one that defied both logic and humanity. Aid when delivered effectively in partnership with local communities is not charity – it’s an investment in a safer and more prosperous world.
“Undermining it, especially vital finance for water, weakens the world’s resilience to climate shocks, pandemics, and conflict – impacting the one in 10 people without access to clean water, and ultimately making us all less safe.
“This is a short-sighted political decision with long-term consequences for the UK’s stability, economy and global standing. We join with MPs in urging the government, once again, to urgently reconsider.”
Lack of transparency over private contractors’ spending
In the report, MPs said it is worried the Foreign Office has not reviewed aid spending on multilateral organisations, which allows the UK less direct influence over spending, such as the World Bank or vaccine organisation Gavi since 2016, despite spending nearly £3bn on them in 2024.
They said the use of private contractors does not offer inherently poor value for money, but a lack of transparency and data can mean under-delivering and a loss of “in-house” expertise.
Palestinians carry aid supplies that entered Gaza. Pic: Reuters
‘Tragic error’
Sarah Champion, chair of the International Development Committee, said: “Ensuring aid delivers genuine value for money has never been more important. As major donors tighten their belts, we have to ensure that every penny we spend goes to the people most in need.
“The former Department for International Development was rightly seen as a world leader in value for money; the FCDO is broadly hanging on to that reputation. But it must make some urgent improvements.
“Reducing poverty must be the central aim of the development budget. While accountability to the taxpayer is an important consideration, the FCDO’s current definition of value for money risks diverting focus away from improving the lives of the most vulnerable – the very reason the aid budget exists at all.
“The savage aid cuts announced this year are already proving to be a tragic error that will cost lives and livelihoods, undermine our international standing and ultimately threaten our national security. They must be reversed.
“Value for money is critical to making the most of a shrinking aid budget. While this report finds some positives, the government must take urgent action to wipe out waste and ensure the money we are still spending makes a genuine difference.”
An FCDO spokesperson said: “As the International Development Committee’s report finds, the FCDO continues to be recognised as a leader in achieving both value for money and transparency for the public on UK aid spending.
“Every pound of the aid budget must deliver both for UK taxpayers and the people we support. Those two objectives will always go hand in hand.
“That’s why we’re focusing our efforts where they have the biggest impact against our priorities, such as supporting vaccine programmes through Gavi, which protects millions, and helping people caught in crises, because tackling global threats helps keep us all safer.”
Cryptocurrency markets saw another week of consolidation following last week’s long-awaited market recovery.
While Bitcoin (BTC) remained above the key $90,000 psychological level, investor sentiment continued to be dominated by “fear,” with a marginal improvement from 20 to 25 within the week, according to CoinMarketCap’s Fear & Greed index.
In the wider crypto space, the Ether (ETH) treasury trade appears to be unwinding, as the monthly acquisitions by Ethereum digital asset treasuries (DATs) fell 81% in the past three months from August’s peak.
Still, the biggest corporate Ether holder, BitMine Immersion Technologies, continued to amass ETH, while other treasury firms carried on with their fundraising efforts for future acquisitions.
Investors are also awaiting the key interest rate decision during the US Federal Reserve’s upcoming meeting on Wednesday to provide more cues about monetary policy leading into 2026.
Markets are pricing in an 87% chance of a 25 basis point interest rate cut, up from 62% a month ago, according to the CME Group’s FedWatch tool.
Ethereum treasury trade unwinds 80% as handful of whales dominate buys
The Ethereum treasury trade appears to be unwinding as monthly acquisitions continue to decline since the August high, though the largest players continue to scoop up billions of the Ether supply.
Investments from Ethereum DATs fell 81% in the past three months, from 1.97 million Ether in August to 370,000 ETH in November, according to Bitwise, an asset management firm.
“ETH DAT bear continues,” wrote Max Shennon, senior research associate at Bitwise, in a Tuesday X post.
Despite the slowdown, some companies with stronger financial backgrounds continued to accumulate the world’s second-largest cryptocurrency or raise funds for future purchases.
BitMine Immersion Technologies, the largest corporate Ether holder, accumulated about 679,000 Ether worth $2.13 billion over the past month, completing 62% of its target to accumulate 5% of the ETH supply, according to data from the Strategicethreserve.
BitMine holds an additional $882 million worth of cash according to the data aggregator, which may signal more incoming Ether accumulation.
Citadel causes uproar by urging SEC to regulate DeFi tokenized stocks
Market maker Citadel Securities has recommended that the US Securities and Exchange Commission tighten regulations on decentralized finance regarding tokenized stocks, causing backlash from crypto users.
Citadel Securities told the SEC in a letter on Tuesday that DeFi developers, smart-contract coders, and self-custody wallet providers should not be given “broad exemptive relief” for offering trading of tokenized US equities.
It argued that DeFi trading platforms likely fall under the definitions of an “exchange” or “broker-dealer” and should be regulated under securities laws if offering tokenized stocks.
“Granting broad exemptive relief to facilitate the trading of a tokenized share via DeFi protocols would create two separate regulatory regimes for the trading of the same security,” it argued. “This outcome would be the exact opposite of the “technology-neutral” approach taken by the Exchange Act.”
Citadel’s letter, made in response to the SEC looking for feedback on how it should approach regulating tokenized stocks, has drawn considerable backlash from the crypto community and organizations advocating for innovation in the blockchain space.
Arthur Hayes warns Monad could crash 99%, calls it high-risk “VC coin”
Crypto veteran Arthur Hayes has issued a warning over Monad, saying the recently launched layer-1 blockchain could plunge as much as 99% and end up as another failed experiment driven by venture capital hype rather than real adoption.
Speaking on Altcoin Daily, the former BitMEX chief described the project as “another high FDV, low-float VC coin,” arguing that its token structure alone puts retail traders at risk. FDV stands for Fully Diluted Value, which is the market value of a crypto project if all its tokens were already in circulation.
According to Hayes, projects with a large gap between FDV and circulating supply often experience early price spikes, followed by deep selloffs once insider tokens unlock. “It’s going to be another bear chain,” Hayes said, adding that while every new coin gets an initial pump, that does not mean it will develop a lasting use case.
Hayes said most new layer-1 networks ultimately fail, with only a handful likely to retain long-term relevance. He identified Bitcoin, Ether, Solana (SOL) and Zcash (ZEC) as the small group of protocols he expects to survive the next cycle.
Last year, Monad raised $225 million in funding from venture capital firm Paradigm. The layer-1 blockchain went live on Monday, accompanied by an airdrop of its MON token.
$25 billion crypto lending market now led by “transparent” players: Galaxy
The crypto lending market has become more transparent than ever, led by the likes of Tether, Nexo and Galaxy, and has just hit an aggregate loan book of nearly $25 billion outstanding in the third quarter.
The size of the crypto lending market has increased by more than 200% since the beginning of 2024, according to Galaxy Research. Its latest quarter puts it at its highest since its peak in Q1 2022.
However, it has yet to return to its peak of $37 billion at that time.
The main difference is the number of new centralized finance lending platforms and much more transparency, said Galaxy’s head of research, Alex Thorn.
Thorn said on Sunday that he was proud of the chart and the transparency of its contributors, adding that it was a “big change from prior market cycles.”
Portal to Bitcoin raises $25 million and launches atomic OTC desk
Bitcoin-native interoperability protocol Portal to Bitcoin has raised $25 million in funding amid the launch of what it describes as an atomic over-the-counter (OTC) trading desk.
According to a Thursday announcement shared with Cointelegraph, the company raised $25 million in a round led by digital asset lender JTSA Global. The fundraise follows previous investments by Coinbase Ventures, OKX Ventures, Arrington Capital and others.
Alongside the fresh funding, the company rolled out its Atomic OTC desk, promising “instant, trustless cross-chain settlement of large block trades.” The newly deployed service is reminiscent of crosschain atomic swaps offered by THORChain, Chainflip, and more Bitcoin-focused systems such as Liquality and Boltz.
What sets Portal to Bitcoin apart is its focus on the Bitcoin-anchored crosschain OTC market for institutions and whales, along with its tech stack. “Portal provides the infrastructure to make Bitcoin the settlement layer for global asset markets, without bridges, custodians, or wrapped assets,” said Chandra Duggirala, founder and CEO of Portal.
DeFi market overview
According to data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization ended the week in the red.
The Canton (CC) token fell 18%, marking the week’s biggest decline in the top 100, followed by the Starknet (STRK) token, down 16% on the weekly chart.
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.
The lower house of Poland’s parliament failed to secure the required three-fifths majority to override President Karol Nawrocki’s veto of the Crypto-Asset Market Act, pushing the country further away from regulating its digital-asset sector at a moment when lawmakers argue that oversight is increasingly urgent.
As Bloomberg reported Friday, the legislation — advanced by Prime Minister Donald Tusk’s government — was intended to align Poland with the European Union’s MiCA framework for crypto markets. The bill was introduced in June but did not survive the president’s veto.
Nawrocki blocked the measure last week, arguing it would “threaten the freedoms of Poles, their property, and the stability of the state,” as Cointelegraph previously reported.
With the president’s veto upheld, the bill will not move forward, forcing the government to restart its crypto lawmaking process.
The proposal has sharply divided lawmakers and the crypto industry. Supporters framed the bill as a national security priority, saying that comprehensive rules are necessary to curb fraud and prevent potential misuse of crypto assets by foreign actors, including Russia, according to Bloomberg.
However, several crypto-industry groups opposed the legislation, warning that its requirements were overly burdensome and could drive startups out of the country.
Critics pointed to stringent licensing rules, high compliance costs and criminal-liability provisions for service-provider executives, arguing that the bill risked stifling innovation and creating an uncompetitive business environment.
Related: EU plan would boost ESMA powers over crypto and capital markets
Crypto adoption in Poland ramps up amid regulatory pause
Cryptocurrency use in Poland continues to accelerate even as the country stalls on comprehensive regulation. Chainalysis recently identified Poland as one of Europe’s “large crypto economies,” noting that the country’s onchain activity has expanded significantly over the past year.
According to the company’s 2025 Europe Crypto Adoption report, Poland recorded more than 50% year-over-year growth in overall transaction volume.
Polish investors are also increasing their exposure to Bitcoin (BTC), reflected in a surge in Bitcoin ATM installations in recent years. In January, Cointelegraph reported that Poland had become the world’s fifth-largest Bitcoin ATM hub, surpassing even El Salvador — a country that has made Bitcoin a central element of its monetary and financial system.
Magazine: When privacy and AML laws conflict: Crypto projects’ impossible choice
US attorneys representing the federal government have requested that a judge send Terraform Labs co-founder Do Kwon to prison for 12 years at his sentencing hearing next week.
In a Thursday filing in the US District Court for the Southern District of New York, prosecutors asked that a judge sentence Kwon “to a term of twelve years’ imprisonment and finalize the forfeiture of his criminal proceeds.”
The filing came about four months after the Terraform co-founder pleaded guilty to two counts of wire fraud and conspiracy to defraud.
“In just a few years, Kwon caused losses that eclipsed those caused by Samuel Bankman-Fried […] Alexander Mashinsky […] and Karl Sebastian Greenwood [….] combined [emphasis included in filing],” said the Thursday filing. “The Terraform market crash triggered a cascade of crises that swept through cryptocurrency markets and contributed to what has since become known as ‘Crypto Winter.’”
Kwon, who is scheduled to be sentenced on Thursday, was indicted by US authorities in March 2023 for charges including securities fraud, market manipulation, money laundering and wire fraud related to his role at Terraform.
Though his whereabouts were initially unknown after the collapse of Terra in 2022, authorities in Montenegro arrested him on charges unrelated to his role at the company, and he was later extradited to the US.
Related: South Korea targets sub-$680 crypto transfers in sweeping AML crackdown
The price of Terra’s native token, LUNA, surged by more than 40% in the previous 24 hours amid the release of the sentencing recommendation, from about $0.07 to $0.10 at the time of publication. However, the token reached an all-time high price of more than $19.00 before the ecosystem collapsed in May 2022.
Kwon says he could still face prison time in South Korea
In a November court filing, lawyers representing Kwon asked that the Terraform co-founder be given a sentence of no more than five years. His attorneys presented several arguments in favor of a shorter sentence, including that the co-founder could face 40 years in prison in his native South Korea, where prosecutors are also working on a case against him.
“He would not be able to walk out of jail in the United States as a free man for any amount of time: He will be taken from whatever facility in which he serves his sentence directly to an immigration detention center to await a deportation flight to Seoul, where he will immediately reenter pretrial detention pending his criminal charges in South Korea,” said Kwon’s lawyers.
Although Kwon’s and prosecutors’ respective recommendations will remain under consideration, the judge overseeing the sentencing hearing has the authority to sentence the Terraform co-founder to decades in prison, or a significantly shorter time. In contrast, former FTX CEO Sam Bankman-Fried is serving a 25-year sentence after his conviction on seven felony charges, former Celsius CEO Alex Mashinsky was sentenced to 12 years in prison, and a judge sent Karl Sebastian Greenwood to prison for 20 years for his role in the OneCoin scheme.
Magazine: When privacy and AML laws conflict: Crypto projects’ impossible choice
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