A resurgent bitcoin price saw its rally grind to a halt on Monday following a report that South Korean regulators tasked with combating money laundering and terrorist financing would probe bank accounts belonging to domestic cryptocurrency exchanges.
Despite losing a significant amount of market share in the face of a widespread altcoin rally, bitcoin managed to rise during the first week of the new year.
Over the weekend, though, the flagship cryptocurrency embarked on a rally of its own. By Saturday evening, the bitcoin price had soared to $17,252 on Bitfinex, its highest mark since December 21 and an increase of nearly $4,000 from where it began the year.
However, shortly after reaching this mark the bitcoin price entered a steep decline, and at the time of writing on Monday, it was trading at just $14,989 — a 13 percent decline from its Saturday peak.
The decline appears to be at least partially linked to a report from regional media outlet Yonhap that South Korean regulators are planning to conduct an “intensive probe” into bank accounts belonging to South Korean cryptocurrency exchanges.
The inspections, which will be overseen by the Financial Services Commission (FSC), seek to determine whether banks have complied with anti-money laundering policies when servicing domestic bitcoin exchanges, which have reportedly deposited more than 2 trillion won ($1.8 billion) at Korean banks.
The probe comes as regulators have sought to tighten inflows of fiat currency into Korean exchanges and curb the country’s heated cryptocurrency markets, which often price coins and tokens at excessive premiums relative to their global average prices.
Traders are clearly concerned about what regulators will find when they conduct their inspections, as well as how they will respond if they deem an account to be non-compliant. Korean officials have not ruled out shutting cryptocurrency exchanges down in the future for failing to comply with regulations, so the move could result in a turbulent week for the markets as traders await an official report.
Notably, this uncertainty appears to have dwarfed other bullish announcements, the most significant of which is that the New York Stock Exchange (NYSE) has filed to list leveraged Bitcoin ETFs on its Arca trading platform, an event that would further cement cryptocurrency as a mainstream asset class.
Write to Josiah Wilmoth at josiah.wilmoth(at)ccn.com.
Featured image from Shutterstock.
Last modified: May 20, 2020 9:13 PM