South Korean Government Seeks to Regulate International Remittances Related to Crypto ‘Kimchi Premium’

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South Korean Government Seeks to Regulate International Remittances Related to Crypto ‘Kimchi Premium’

The infamous price difference between cryptocurrencies on South Korean and overseas crypto-currency exchanges, known as the kimchi premium, has the country’s government a little worried. According to recent reports, the country is considering regulating international kimchi money transfers based on bounty transactions.

Kimchi premium explosion Remittances can be detected as money laundering

According to Maeil Kyungjae, the South Korean government discovered that some domestic investors were actively sending their orders abroad to buy crypto from sellers in China.

The maneuver allows these crypto traders to sell the digital assets they bought to Chinese sellers over the counter and elsewhere on South Korean exchanges to take advantage of the kimchi premium.

In addition, South Korean authorities suspect that the contract with the Chinese suppliers may be subject to criminal prosecution, as the domestic suppliers could be involved in money laundering.

Nevertheless, the Financial Supervisory Service (FSS) is working on this issue and trying to develop guidelines to deal with this type of transfers. According to a report in the local media, this would involve consultations with ministries such as the Ministry of Strategy and Finance.

In addition, the FSS held meetings with some heads of bureaux de change of non-named commercial banks in South Korea. The aim of these briefings is to strengthen measures against money laundering (AML) by detecting suspicious transactions, such as larger sums of money.

One bank has already taken the first step to introduce limits

For example, the annual limit for foreign remittances in South Korea is $50,000. If someone transfers that much money in one go, the banks have to flag it as suspicious and report it to the authorities.

One major bank, Woori, has already taken steps to limit money transfers to $10,000 per month. In addition, if the customer wants to send fiat money to China, he must go to the branch to prove to the bank the reason for the transfer.

However, the banking sector is sceptical as to whether measures against such transactions will be strengthened. An unnamed official of a major commercial bank in South Korea said:

The Treasury, the Financial Services Commission and the Financial Services Authority have taken mixed stances on the cryptocurrency sector.

Kimchi Premium is back in business

As Bitcoin.com News reported earlier this month, bitcoin (BTC) and ethereum (ETH) rose 18% on the global average earlier this month.

At the time of publication (April 6), Bitumba’s BTC price was 77,804,000 kW, or $69,423 per unit. However, on most global crypto currency exchanges, the price of bitcoin hovers around $58,500.

What do you think of the South Korean government’s plans? Let us know your comments in the section below.

Photo credit: Shutterstock, Pixabay, Wiki Commons

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Emilia James
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