The Bank of Korea (BoK) has issued a warning about the possible recurrence of the gap in cryptocurrency prices between local and foreign crypto exchanges. Dubbed “kimchi premium”, this phenomenon will mostly affect BTC.
“Kimchi premium” was first introduced as a notion in December 2017, when the maximum BTC price in South Korea started exceeding its average market value elsewhere by 30%. Whereas bitcoin price outside South Korea peaked at $19 500, local exchanges were trading BTC at $25 000 rate.
In a yesterday’s report, BoK warned the public about the possible emergence of yet another price anomaly. Kim Dong-sup, the official behind the bank’s payment systems research team, has claimed that the “kimchi premium” is an “indicator of the overheated domestic market.”
South Korea ranks third in the world after the U.S. and Japan in the scale of cryptocurrency user base. CoinMarketCap, nevertheless, removed South Korean exchanges from its index under the pretext of “extreme divergence in prices from the rest of the world”. The gap in cryptocurrency prices reached its peak in January at 48.28%, while crypto prices at foreign exchanges denominated in major worldwide currencies such as the U.S. dollar and the euro had no real price differences. Despite the fact, that this anomaly waned in just a month, the country’s authorities advised the citizens against putting too much trust in cryptocurrency exchange rate stability.
This January, South Korean regulators prohibited the use of anonymous accounts for cryptocurrency trading. However, the country’s government is now considering the option of lifting the ICO ban imposed by the Financial Supervisory Service (FSS) back in September 2017.