PwC testing a blockchain analytics tool for tracking the global footprint of ICO tokens

Accounting firm PwC is testing a blockchain analytics tool to help trace digital tokens after their launch, helping companies to guard against the risk their tokens will be misused as a medium for money laundering and other crimes.

PwC China and Hong Kong forensic services partner Eric Young said the new service comes at a time when he has seen growing interest from Asian companies in the manufacturing, retail and technology sectors seeking to raise funds through initial coin offerings (ICO). Both Hong Kong and Singapore have become favoured jurisdictions for token issuances, as both have opted not to regulate ICOs so long as the tokens are not structured as, or have no characteristics of, a security.

Blockchain, also known as distributed ledger technology, is a digital, decentralised ledger that keeps records of all transactions that take place across a peer-to-peer network. It is also the underlying technology of bitcoin and other cryptocurrencies.

Young said the blockchain analytics tool, being developed by the emerging technology team comprising 80-plus people, will allow ICO issuers to trace their cryptocurrencies post-issuance

“While on the blockchain ledger one could track the amount of transactions that have been done using the cryptocurrencies, there is still no way for an issuer of an ICO to trace its coins and know how these coins are being used,” Young said.

One goal is to help companies mange the risks of their tokens being transferred to entities or individuals linked to sanctioned countries.

“With artificial intelligence built into our back engine, our solutions would enable clients to better predict which jurisdictions the digital token could potentially be circulated to. Depending on the type of company and the type of business it is engaged in, it could then apply a high risk score to that particular jurisdiction,” he said.