Trading the Kimchi Premium

[Samcoins]

Hello everyone,

The Kimchi Premium was a topic mostly prominent in 2017 when BTC traded several thousand dollars higher on South Korean exchanges like Bithumb or Upbit. Fast forward to today and the premium still exists but is only around 4%.

My question is whether the premium is actually tradable for someone who is not a South Korean resident. I can't find a definite answer. I'm especially wondering what exactly makes it so hard to trade the premium. What are the steps necessary to do so? In some article I read that one would need a bank account at South Korean Bank. There was also something very vague stated about taxes that you would have to pay in South Korea. To what extent do these (and other?) factors complicate or even inhibit trading the Kimchi premium?

Thanks in advance

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[jackg]

I'd assumed it was just financial services being a bit more segregated than they are in places where bitcoin has high volume.

Sorting something like this probably relates directly to the idea you can't buy bonds without a certain amount of capital - and that's normally the easiest way to go about reducing a premium like that without making your own service for selling cryptocurrency to South Koreans.

You'd likely only owe tax to your current government under this system but the logistical challenges of setting up and account and doing this cheaply are still going to remain. The 4% sounds like it's close to what PayPal charges 1) for international payments and 2) for rate conversion (combined) which might be what has driven the price to where it is now - banks likely charge similar.

I've also heard the FTX founder and ceo made money out of a method of selling bitcoin in South Korea and buying elsewhere (there's a chance I fell victim to clickbait) but that might be something to look up. If someone often travels to and from there, it might make it more possible - but you can't normally take huge amounts of cash through airports (the EU had it limited to €10 000 and I think that's one of the biggest limits).

[Bitcoin_Arena]

I have noticed this kind of thing before though not particular with the Kimchi premium but up on deep research and interactions with traders from that country, I got to realize that I was hard for them to cash out given the Government stance on cryptocurrencies and this might be the same thing with South Korea.

Cashing out so that you can make that quick profit, arbitrage trading, may not be possible. Please try to engage with traders from South Korea through telegram, Exchange chats or discord groups. They will easily tell you what's going on

[adaseb]

I looked into this back in 2017 and figured out why there is a massive premium. It’s due to capital controls. I forgot which way but you could send your Bitcoin and sell it for their currency but you wouldn’t be able to get your usd back pretty much.

There is also the issue that you need to be a citizen just to open a bank account there. You can’t just open it online and wire money back and forth, won’t work.

If it was easy:.. there wouldn’t be a premium.

[Bitcoin_Arena]

I looked into this back in 2017 and figured out why there is a massive premium. It’s due to capital controls. I forgot which way but you could send your Bitcoin and sell it for their currency but you wouldn’t be able to get your usd back pretty much.

There is also the issue that you need to be a citizen just to open a bank account there. You can’t just open it online and wire money back and forth, won’t work.

If it was easy:.. there wouldn’t be a premium.

Spot on, depositing and selling the Bitcoins or other coin is very easy, but getting the money back in form of fiat is where the hurdle is. Ideally, getting someone whom you know from South Korea would work as they would help you sell and then send you back the money to buy more coins, but the problem is trust issues and sometimes other factors such as weird exchange rates by international transfer banks that can just eat up all the projected profits in a flash.

The situation is similar to that of exchanges like Yobit and hitbtc that keep wallets of certain coins under maintenance for ages.