The Australian Crime Commission has revealed the existence of an operation to monitor the use of digital currencies, including BitCoin, by criminals.
A statement issued yesterday by Judy Lind, the ACC's executive director, strategy and specialist capability, said that during 2014 the law enforcement agency "has continued to collect intelligence on the threat posed by the criminal exploitation of virtual currencies".
An operation dubbed 'Project Longstrike' aims to "develop an enhanced understanding of the national and international environment in the detected misuse of virtual currencies to facilitate criminal activity," a statement issued by Lind said.
"Insight gained from this activity will be used to inform the development of response strategies – whether that be legislative, regulatory, policy or other risk mitigation strategies and of course a combination of responses.
"In 2012 and 2013, Targeting Criminal Wealth Projects Rumpere and Lumberjack resulted in a better understanding of the serious and organised crime threats and opportunities of alternative anonymous currencies like bitcoin. This included the development of technical methodologies to trace bitcoin transactions."
BitCoin and other digital currencies are "used as payment methods to facilitate illicit trade on the darknet," the statement said.
"Virtual currencies can be used anonymously and provide a layer of anonymity in addition to that provided by the darknet. People buying illicit commodities such as weapons or drugs on darknets can be attracted to buying from domestic vendors to avoid the risk of being detected by Customs at the border.
"By its very nature, the darknet is a black market and it is very difficult to precisely determine the extent of its use but intelligence suggests that there continues to be significant use of the darknets by serious and organised criminal entities and those seeking to access illicit commodities."
The potential for criminals to employ BitCoin and similar currencies has previously drawn the interest of AUSTRAC, Australia's anti-money-laundering watchdog.
The use of digital currencies is currently the subject of a parliamentary inquiry.
The inquiry by the Senate's Economics References Committee was established in October on the initiative of Labor Senator Sam Dastyari.
At the first hearing of the inquiry, held on 26 November, the crypto-currency's advocates said that a ruling by the Australian Taxation Office on the treatment of Bitcoin was acting as a brake on Bitcoin-related businesses in Australia.