Penalties for kimchi premium abusers; Digital yuan on trial again
Korea issues penalties for kimchi premium arbitrage as China holds its 15th digital yuan pilot trials.
Kimchi premium becomes kimchi penalty.
Chengdu holds China’s latest digital yuan trial.
Taiwan’s Lootex uses NFT’s to preserve cultural history.
We’ll have more on these stories — and other news shaping the cryptocurrency and blockchain world — in this episode of The Daily Forkast, July 8.
Welcome to The Daily Forkast, July 8th, 2021. I'm Angie Lau. Editor-in-Chief of Forkast.News, covering all things blockchain.
Coming up, Korea penalties for the kimchi premium, Chengdu holds China's latest digital yuan trial and Taiwan's Lootex uses NFTE to preserve cultural history.
Let's get you up to speed from Asia to the world.
The kimchi premium has become the kimchi penalty. South Korea has arrested 33 people in connection of violating the country's Foreign Exchange Transactions Act using crypto. One of them is a university student who earned two billion KRW. That's about US$1.7 million through what's known as the kimchi premium arbitrage. That's when people purchase Bitcoin outside Korea, then sell it back in Korea to make a profit, taking the difference as the Bitcoin price in South Korea has been significantly higher than in other places around the world.
In the past year, Bitcoin's kimchi premium has ranged from five to over 20% over the global market price.
Now, the arbitrage itself is not illegal, but violations happened when South Koreans who do it make false reports to authorities when moving their money into foreign exchanges, which is illegal. By law, Korea requires all foreign remittances of over US$5,000 to be examined by banks. In most cases, banks don't allow those remittances to be made for investing in crypto overseas.
Now we talk to Crypto billionaire Sam Bankman-Fried, who made his name by capitalizing on the kimchi premium on FTX, saying the clampdown is all about control.
“The Korean government does not want people to be able to freely transact with [Korean won] for speculative purposes, and they’re worried about crypto being used as a means for that. So they’re clamping down, really indirectly, on the arbitrageurs and market makers.”
The student caught by Korean Customs Service had sent around US$35 million to Hong Kong over the course of 851 transactions from March 2018 to June 2018, most of which was spent on buying crypto. Those tokens were later sold on a Korean exchange for which they earned the kimchi premium of US$1.7 million. The remitted amount was falsely reported to customs as expenses for studying abroad.
Though I would wonder how a student would get access to US$35 million, that's probably another question. But according to authorities, more than 33 people — some of who have already been fined — had carried out US$1.5 billion worth of transactions in total.
China's plans for its digital RMB are forging ahead. Local media reports that a 15th round of testing of the RMB is now underway. That's right — the fifteenth time.
This time, it is in Chengdu and the focus is on green commuting. 12 million digital yuan, or around US$1.8 million has been given out in a lottery to residents for use on public transport and shared bikes. China plans to fully unveil its digital yuan at the 2022 Beijing Winter Olympic Games.
And onto the markets now. Bitcoin was down almost 6.5% at just under US$32,500. That's as of 4 p.m. Hong Kong time at the end of the local Asian trading day. And in the top 10 for cryptocurrencies, in a day of mostly read across the board, Uniswap was down 11.5%, and Dogecoin down 9.5%.
And finally today, Taiwan's Lootex — a decentralized auction house — is selling NFTs not just as a work of art, but as a way of preserving cultural history amid concerns over politics.
Legendary Hong Kong comics, Chinese Hero Buddha's Plam and Teddy Boy are all now available as limited edition manga NFTs. Lootex says they are doing so in case of restrictions being imposed on publishing in Hong Kong.
"[The Hong Kong government] could take aim at some comic books such as Teddy Boy or Buddha's Plam. These could be something that don't really fall in favor of the government. So I feel we are doing something meaningful, as to help preserve their culture."
In this case, NFT is not just about the future of art, now also about preserving the present.
And that's The Daily Forkast from our vantage point right here in Asia. For more, visit Forkast.News. I'm Editor-in-Chief Angie Lau. Until the next time.