The famous cryptocurrency price gap on South Korean crypto exchanges and overseas, known as the “kimchi premium,” is a concern for the country’s government. The latest reports suggest the country plans to regulate international remittances tied to premium-driven kimchi transactions.
Transfers to use Kimchi Premium could be marked as money laundering
According to Maeil Kyungjae, the South Korean government has found that some domestic investors are actively sending their fiat overseas to buy crypto from sellers in China.
The maneuver enables these crypto traders to sell the digital assets purchased from the over-the-counter Chinese sellers and other locations on South Korean exchanges to take advantage of the Kimchi Premium.
In addition, the South Korean authorities suspect that the fiat made with Chinese sellers could be prosecuted as the domestic dealers could commit money laundering.
However, the Financial Supervisory Service (FSS) is assessing the problem and trying to formulate guidelines for such transfers. A local media report said ministries like the Ministry of Strategy and Finance need to be consulted.
In addition, the FSS held meetings with some heads of foreign exchange departments at undisclosed commercial banks in South Korea. The aim of the briefings is to strengthen anti-money laundering (AML) measures by flagging suspicious transactions such as higher sums of money.
A bank has already taken the first step in setting limits
For example, the annual overseas transfer limit in South Korea is $ 50,000. If someone sent such an amount of money in a single transaction, the banks would have to flag it as suspicious and then report it to the authorities.
A major bank, Woori, has already taken action by capping transfers and setting them at $ 10,000 per month. If a customer wants to send Fiat to China, they should contact a branch to prove the motive of the transfer to the bank.
In the banking industry, however, there is skepticism about a possible stepping up of measures to combat such transactions. An unnamed official from a “major commercial bank” in South Korea said:
The Treasury Department, the Financial Services Commission and the Financial Oversight Service have taken an ambiguous stance 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% above the global average at the beginning of the month.
At the time of publication (April 6), the price of BTC on Bithumb was KRW 77,804,000, or $ 69,423 per unit. However, the price per bitcoin was $ 58,500 on most global crypto exchanges.
What do you think of the South Korean government’s plans? Let us know in the comments below.
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