Bitcoin price reached $2,850 in South Korea on May 23, because of the unexpectedly growing demand for Bitcoin and different cryptocurrencies. Whilst arbitrage possibilities in South Korea existed since the launch of Korbit, Coinone and Coinhumb, the three main Bitcoin exchanges in South Korea, the premium rate rarely went past ten percent. Nowadays, the premium rate on South Korean Bitcoin exchanges almost reached thirty percent, demonstrating a buying and selling price of $2,850 for Bitcoin, even as Bitcoin was traded for almost $2,100 in the United States and China.
The driving factor of this huge arbitrage opportunity and premium rate in South Korea is the country’s strict anti-money laundering regulations. In South Korea, any kind of gambling is illegal and due to a huge amount of black cash consisted of revenues from casinos and different organizations are sent back to South Korea on an everyday foundation. Authorities are strict on any transactions, which goes past $10,000 in overall value.
Therefore, even with a South Korean bank account, it is very hard to take advantage of the South Korean Bitcoin exchange marketplace’s arbitrage opportunity and huge premium rate. If anyone sell more than $10,000 well worth of Bitcoin at any of South Korea’s strictly regulated Bitcoin exchanges operators of Bitcoin exchanges are required to contact the consumer for extra verification. such strict anti-money laundering and know Your customer regulations drive away Bitcoin traders to over-the-counter markets including LocalBitcoins, a peer to peer Bitcoin exchange platform in which customers and seller at once initiate offers to buy or promote Bitcoin.
For example, whilst the Chinese government suspended the withdrawal of China’s Bitcoin exchanges, LocalBitcoins China noticed a huge spike in its weekly buying and selling volume. At this period of time, the China’s regulators additionally applied strict know Your customer protocols for exchanges and required Bitcoin investors to engage in face to face interviews and submit economic documents to trace the of consumer finances.
In South Korea, the implementation of strict anti-money laundering and know your customer structures had the alternative impact. The legalization of Bitcoin buying and selling and the strict regulatory framework for Bitcoin exchange structures demonstrated the Bitcoin exchange marketplace and business in South Korea. Therefore, the demand for Bitcoin has kept rising in spite of the premium rate.
The South Korean Bitcoin exchange marketplace are operated by three powerhouse exchanges supported by a number of biggest multi-billion dollar conglomerates and economic institutions in South Korea. Therefore, liquidity and alternatives are limited. Because the supply of Bitcoin has been limited and the demand keep rising, Bitcoin continually traded with a premium rate in South Korea.