Taking the heat out of the ‘Kimchi premium’
Government and private research projects are starting to tackle South Korean crypto investment fraud and domestic-international price disparities
With the crypto-currency industry’s rapid expansion has come a large number of dubious projects established only to part uninitiated investors from their money. In South Korea’s booming crypto-currency markets, a number of research centers have opened to tackle this issue and are providing market and background information with the aim of protecting the public from fraudulent investment schemes.
This week, South Korea’s first “blockchain company builder”, Chain Partners Inc, started hiring staff for its own research center. The firm says it specifically seeks senior crypto analysts with over five years’ experience in investment banking.
A similar project comes from the Chain Partners Research Center that presented Korea’s first crypto-currency index and which publishes a daily report analyzing the markets.
The China Center for Information Industry Development, part of the Ministry of Industry and Information Technology, also publishes a crypto-currency ranking index that tends to focus on home-grown PRC blockchain projects.
The Chain Partners center index aims to develop a framework similar to the Korea Stock Exchange KOSPI 200, which displays price trends and transaction data such as trade volumes, on the basis that these data sets offer a good indicator of overall market sentiment. Other big names in investment and finance have also launched similar indexes, such the Bloomberg Galaxy Crypto Index that was developed with former Goldman Sachs hedge fund manager and now Bitcoin billionaire, Michael Novogratz.
South Korea’s third largest exchange, Coinone, has also opened a research center to analyze and report on market conditions and warn against fraudulent projects. And the world’s top crypto exchange by trade volume, Binance, has launched Binance Info which provides “users with coin/token information, including basic info, up-to-date news, real-time price movements, social media and community info” according to its company website.
In addition to ICO scams, Korean investors have had to deal with the so-called “kimchi premium“, where crypto-currencies have higher prices on domestic exchanges than on overseas ones. In the last week, the crypto media reported that Korea’s largest exchange, Bithumb, was often displaying prices several hundred percent higher than on foreign exchanges.
Over the past six months the South Korean government has implemented a series of regulations and security measures to slow rampant crypto-based speculative investing, but more recently has been working to both revise their regulation and revamp their classification.
The Ministry of Strategy and Finance now says that in the future the blockchain industry will be managed as a “formal industry” that includes the application of a system of classification, surveys and statistics. The country’s Financial Services Commission said, at the start of July, that it is “not opposed” to crypto-currencies and plans to follow the G20’s vision of an international crypto regulation system.