'kimchi premium? Transfer to China has increased 10 times'

For 13 days this month, foreigners sent money to China through domestic commercial banks more than 10 times the average of last month, a report showed. It is estimated that Bitcoin Exchange, which utilizes the so-called "Kimchi Premium," in which cryptocurrencies such as Bitcoin are traded more expensively in Korea, is systematically prevalent.

According to data received by Rep. Sung Il-jong of the People's Power from the Financial Supervisory Service on the 23rd, foreign residents and non-residents from the five major commercial banks, including KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup, sent to China from the 1st to 13th of this month. It is 950 percent higher than the monthly average of 9,293,000 dollars last year. Exchange forces seem to be transferring the profits to China by selling bitcoin purchased from overseas such as China at high prices on domestic exchanges where kimchi premiums are formed. An official from the financial sector said, "The abnormal increase in Chinese remittance amount cannot be explained except for arbitrage."

There are also concerns that the domestic cryptocurrency market will be abused as an illegal money laundering channel overseas, as kimchi premium can make a big profit. If the Specific Financial Information Act takes effect in September, cryptocurrency exchanges will also have an obligation to prevent money laundering. When banks issue real-name deposit and withdrawal accounts to cryptocurrency exchanges, they should verify the risk of preventing money laundering. The Korea Federation of Banks is working to come up with common evaluation guidelines within this month.