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.
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.
The increasingly innovative use of blockchain means that ICOs are no longer the sole domain of projects related to payment networks, gaming or finance.
In January, Eastman Kodak launched KODAKCoin, as part of its new blockchain project that will create an encrypted digital ledger to help photographers license their work and protect their intellectual property rights. The platform is built in partnership with WENN Digital.
Today, however, there are no specific accounting standards for ICOs. Worse, cryptocurrencies such as bitcoin have been perceived as a tool to enable money laundering, or illicit transactions on the dark web.
“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.
Over the past six months, PwC has started working with companies seeking to launch ICOs by assisting with designing their governance structure, identifying and verifying customers under the know your client procedures, and complying with best practice and regulation in anti money-laundering procedures.