[Korean Exclusive News]
Author: Shin Yi Jin, South Korea
The government can offer a solution to correct the “Kimchi Premium” and that is – to ease the restrictions on arbitrage trading. However, there is a little possibility that the government will actually ease the restrictions because of the fact that they are unable to control the outflow of foreign currency in the crypto market.
For South Korean government which experienced a foreign currency crisis in the past, it is very unlikely that they would risk such a crisis from happening again.
The market provides a possible solution to correct the ‘Kimchi Premium’ and that is – controlling the local demand.
In April 2018, controlling of local demand was proven to be effective in correcting the KIMP. The market controlled the local demand through various ways; the depositing process was made complex and registrations for new accounts were restricted. With such control put in place, existing demand could not be led to actual trading.
However, some experts claim that the decrease in demand was not caused by the market control but the drastic decline in coin prices during the period.