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This price difference also exists on various exchanges of different sizes, but what's interesting is that in South Korea, where trading volume is not small, and the market is relatively mature, in the past 30 days, the trading volume on Bithumb exchange has never been less than 1,390 Bitcoins, with an average daily trading volume of around 3,000 Bitcoins.
Higher Barriers for Foreign Exchanges
Currently, South Korea ranks 4th in the world in Bitcoin trading volume, following Japan, the United States, and China. In terms of trading volume and liquidity, this undeniably presents an excellent ""arbitrage"" opportunity. However, why hasn't the market balanced out due to arbitrage activities? The reason is that ""very few people can do this"" because South Korea has stricter ""Know Your Customer (KYC)"" and ""Anti-Money Laundering (AML)"" regulations.
In South Korea, if individuals or companies use wire transfers to buy large amounts of Bitcoin overseas, they will be questioned by government agencies and banks about the reasons and the source of funds. For business purposes, companies will be required to declare the source of funds, creating a significant barrier. Therefore, despite the higher costs of domestic trading, there is no willingness to trade on foreign exchanges.
If a South Korean company tries to buy Bitcoin overseas, they will certainly be asked for reasons. If the reasons are not accepted, they might even face fines. Additionally, because the South Korean government currently defines Bitcoin as a ""virtual asset without intrinsic value,"" if a company transfers a large sum to purchase Bitcoin, they would be suspected of money laundering.
While there is significant arbitrage potential with this Bitcoin price difference, it's challenging for foreigners to open a bank account in South Korea. So, even if foreigners want to trade on South Korean exchanges, they might be deterred due to the lack of a local bank account. |
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Post time 1-11-2023 11:58:44
