Ernst & Young (EY) plans to hold a global auction next month on behalf on an "undisclosed seller" to sell off AU$16 million worth of bitcoin that was confiscated as the proceeds of crime during 2015.
Approximately 24,518 units of the digital currency will be sold off via a 48-hour sealed bid auction from 20 to June 21, 2016.
EY said bidders will be able to submit bids on 11 lots of 2,000 bitcoin and one lot of approximately 2,518 bitcoin, where bidders will be able to bid on one lot or multiple lots.
"Interest in this technology continues to grow. The number of bitcoin transactions since 2012 has quadrupled, and parties are seeing more opportunities and uses for the technology," said EY transactions partner Adam Nikitins.
Nikitins went on to say that he believes interested parties would predominately be from North America and Europe, and have experience in dealing with bitcoins such as digital asset investment managers, digital currency exchanges, and investment banks and hedge funds.
"With each lot of bitcoin currently valued at more than AU$1 million, we are targeting sophisticated investors who can see the value of investing in a growing digital asset," he said.
EY said it will be the first bitcoin sale process of its kind in Australia and the second globally, following the US Marshals Service carrying out several similar sales in 2014.
The US Marshals Service auctioned off part of the bitcoin stash the FBI seized in the arrest of Silk Road founder Ross Ulbricht, who was sentenced to life imprisonment without parole. At the time, he was also convicted of drugs and conspiracy counts.
Venture capitalist Tim Draper ended up securing the entire bitcoin stash from the auction, which attracted 45 bidders who submitted 63 bids during the 12-hour auction.
At the time, it was revealed that Draper was working with bitcoin exchange Vaurum to invest the bitcoin into emerging markets where the virtual currency was planned to act as a buffer while investments are made.
In March this year, the Australian government announced plans to remove the "double tax" treatment from those dealing in digital currency such as bitcoin.
In its report, Backing Australian FinTech, the government said it recognises that that the current treatment of digital currency under the Goods and Services Tax (GST) law means that consumers are double taxed when using digital currency to buy anything already subject to GST.
According to the government, blockchain technology -- the underlying technology behind bitcoin -- has attracted considerable interest, adding that it is currently being applied to a number of areas within the international financial system. The government believes the technology has the potential to revolutionise key services like international transfers between banks, equities clearing and settlement, and financial contracts.
The federal government reaffirmed its plans for removing the double tax treatment as part of the 2016 Budget.
It released its GST Treatment of Digital Currency consultation paper that stated three options for changing how the GST impacts digital currencies: Input tax treatment similar to the UK and Europe where bitcoin is regarded as akin to share trading, loans, or exchanges of foreign currency; changing the definition of money in the GST Act to include bitcoin; or explicitly stating that bitcoin is GST free in the same manner that food is GST free.
However, the government said it needs to first work out a Goldilocks definition of digital currency that is suitable for it -- whether it be principles-based, or an explicit list of currencies that meet the definition.
Following the small mention in the federal government's Budget, Data 61, together with government agencies including Treasury, announced they were going to examine what blockchain technology could mean if it were adopted by both government and industry in Australia.
Similar discussions have previously been raised by the chairman of Australian Securities and Investment Commission Greg Medcraft, who has said the emergence of blockchain technology could -- if it takes off -- have the potential of changing the existing financial system.
"Naturally, harnessing this potential will depend on the integrity, capacity, and stability of blockchain technology and processes," he said.
"It will also depend on industry's willingness to invest in, and make use of, new ways of settling and registering transactions. The potential is, nonetheless, enormous. Industry is seeing that potential and is looking to see how it and the markets might benefit."
The Australian Securities Exchange (ASX) is one company that has started to embrace blockchain technology. It is currently working with Digital Asset to develop blockchain technology to replace or upgrade its main trading and post-trade platforms.