LeoGlossary: Kimchi Premium
A phenomenon that happens on South Korean exchanges where cryptocurrency valuation is at a premium as compared to other exchanges around the world. This could be advantageous for Korean traders but they have to buy the cryptocurrency on other exchanges and sell it on one like Upbit.
Trading differences in prices is a form of arbitrage, something trader seek to exploit. While it is legal for the most part, authorities in South Korea have clamped down on it. There it is illegal to profit from the Kimchi Premium.
The challenge for regulators is cryptocurrency is decentralized and trades on both CEX and DEX. Since this is the case, along with the continued maturation of blockchain, we are seeing a pace which exceeds what the regulators (and exchanges) can handle.
In other words, they cannot keep up with all the tokens that keep hitting the market.
Posted Using LeoFinance Beta
