Contrary to its name, the kimchi premium is unfortunately not a fancier, more superior kimchi. The term ‘kimchi premium’ is used in the Korean crypto sphere to indicate the difference in crypto prices in South Korean exchanges versus foreign exchanges.
South Korea is one of the largest markets for cryptocurrencies, reportedly ranking third following the US and Japan. South Korea has a tendency to pay a higher price for bitcoins than in other countries, so much so that in December 2017, the price of Bitcoin was 40% higher in Korea than in the US. The price became so high that CoinMarketCap, a crypto price tracker, removed South Korean exchanges from its index in January 2018.
While the kimchi premium was reported to have vanished due to the Korean government’s strict regulations, the Bank of Korea (BoK) is warning the public of the possibility of a new widening gap, with concerns of illegal foreign exchange transactions and money laundering.
Deemed as a sign of an overheated domestic market, the BoK is urging people to remain aware, continue monitoring the market and be cautious of a “false hope of a price increase”. Is the kimchi premium but a thing of the past, or will it make a striking return?
(By Wolfie Zhao, Coindesk)
(By Marie Huillet, Cointelegraph)
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(By Aisshwarya Tiwari, BTC Manager)
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(By Helen Partz, Cointelegraph)