South Korea is one of the world's most active Bitcoin and cryptocurrency markets. During the 2017-2018 bull market, South Korean trading volumes were so intense that prices on Korean exchanges traded at a persistent premium — known as the "Kimchi premium" — sometimes 30-50% above global rates. This fervent retail participation led to comprehensive regulation, including the Virtual Asset User Protection Act enacted in 2024.
The Kimchi Premium
The "Kimchi premium" refers to the price difference between Bitcoin on South Korean exchanges and global markets:
- During peak periods (2017-18, 2021), BTC traded at 10-50% premiums on Korean exchanges
- Caused by intense domestic demand combined with strict capital controls that make arbitrage difficult
- South Korea restricts foreign exchange transactions, creating a semi-closed market for crypto
- The premium has persisted in various forms during bull markets
Regulation
Early Measures (2017-2018)
- South Korea banned ICOs in September 2017
- Real-name verification system: Required all crypto exchange users to link accounts to real-name bank accounts (implemented January 2018)
- Anonymous crypto trading banned
Virtual Asset User Protection Act (2024)
In July 2024, South Korea's comprehensive crypto regulation came into effect:
- Exchanges must register with the Financial Intelligence Unit (FIU)
- Strict custody and segregation requirements for user assets
- Mandatory insurance and reserve requirements
- Penalties for market manipulation and insider trading
- The Financial Services Commission (FSC) is the primary regulator
Tax
- A 20% tax on crypto gains above ₩2.5 million was repeatedly delayed and is set to take effect in 2025
- The tax has been politically contentious, with multiple postponements
Market
South Korea hosts major crypto exchanges:
- Upbit (operated by Dunamu) — largest Korean exchange, among the top globally by volume
- Bithumb — one of the oldest Korean exchanges
- Coinone and Korbit — other major Korean platforms
- Korean won (KRW) is consistently among the top 3 fiat trading pairs for Bitcoin globally
News Timeline
| Date | Event |
|---|---|
| 2017 | Korean crypto boom; Kimchi premium appears |
| Sep 2017 | ICO ban implemented |
| Jan 2018 | Real-name verification required for all crypto accounts |
| 2021 | Second Kimchi premium episode during bull market |
| Jul 2024 | Virtual Asset User Protection Act takes effect |
| 2025 | 20% crypto tax expected to begin (after multiple delays) |
News last updated: April 2026