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Cryptocurrencies command 'Kimchi Premium' in S.Korea due to capital flow controls - BofA

Cryptocurrencies command 'Kimchi Premium' in S.Korea due to capital flow controls - BofA
Cryptocurrencies command 'Kimchi Premium' in S.Korea due to capital flow controls - BofA   -   Copyright  (c) Copyright Thomson Reuters 2021. Click For Restrictions - https://agency.reuters.com/en/copyright.html   -  
By Reuters

<p><body> <p>By Cynthia Kim</p> <p><span class="caps">SEOUL</span> (Reuters) – Cryptocurrencies like Bitcoin in South Korea carry a hefty premium over international prices due to capital flow controls aimed at curbing cross-border flows of hot money, which prevent arbitrage, the Bank of America said in a report on Tuesday.</p> <p>On Tuesday, Bitcoin, the world’s biggest and best-known cryptocurrency, was trading at $45,219 on Bitstamp Exchange, but data from the Coinmarketcap.com shows it was trading about $4,000 higher in South Korea. Back in January, 2018, the premium went as high as almost $8,000. </p> <p>“The onshore price for cryptocurrencies in Korea is persistently above international prices suggesting this to be a result of effective capital control that prevents effective arbitrage of onshore and offshore prices,” a Bank of America report showed on Tuesday.</p> <p>“Korean capital controls allow the ‘Kimchi premium’ to persist,” it said, calling the phenomenon after Korea’s spicy pickled cabbage side dish.</p> <p>Currently, individuals’ purchases of foreign currency are capped at 50,000 annually.</p> <p>The estimated daily volume of trading in cryptocurrencies in South Korea reached 1,480 trillion won ($1.31 trillion) in the first quarter, and the daily trading volume sometimes exceeds the combined trading volume on the <span class="caps">KOSPI</span> and <span class="caps">KOSDAQ</span> share markets, the report said. </p> <p>($1 = 1,127.8200 won)</p> <p/> <p> (Reporting by Cynthia Kim; Editing by Simon Cameron-Moore)</p> </body></p>