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On Kimchi and Curry Premiums

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Satoshi&Co Daily Crypto Newsletter

July 1 · Issue #203 · View online
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Check out past issues of the newsletter along with more interesting crypto content as well as our recently-launched podcast series with leading crypto industry participants at our newly-launched website

For folks who were around in the crypto space during the 2017 mega bull run, the term “Kimchi Premium” refers to the dizzying premiums paid by Korean customers for buying cryptocurrencies, especially Ethereum and bitcoin. The premium was eventually arbitraged out by investors that had access to both Korean and US banking channels. The significant retail uptake that we witnessed as part  of the 2017 run up caused the prices of cryptocurrencies in South Korea to trade at up to a 25% premium to their global equivalent USD prices, forcing the government to clamp down hard on cryptocurrencies. Such was the demand for cryptocurrencies in 2017 and the “Kimchi Premium” was an indicator of extreme forms of FOMO could often lead to mathematical absurdities in the markets. 
Now, as we start on the 2019 version of the bull run, we are seeing the price spread between South Korean prices and the US prices diverge again, partly as a result of the steep run up in bitcoin prices over the past weeks. The price premium in USD terms has reached a high of $1000 (or 10% premium) in the last couple of days, perhaps due to the significant rise in demand for bitcoin among retail investors.  
The “Kimchi Premium” is the second instance where the local prices for bitcoin in a major market have traded at a meaningful premium to their global USD prices. Here we exclude basket-cases such as Venezuela, Zimbabwe, etc., where crypto prices are always trading off global price ranges due to local supply-demand dynamics. Three weeks ago, with the market was awash with rumors of a potential ban on cryptocurrencies in India, bitcoin started to trade at a premium of $200 - the so-called “Curry Premium” on India’s underground exchanges. Indian exchanges have been completely grounded after the central bank of India cut off the fiat on-ramps for crypto-related businesses in India. Most trading these days happens through surreptitious underground p2p exchanges, that operate strictly in the grey zone, and on WhatsApp groups, and on Signal and Telegram channels.
Interestingly enough, by some measures, India has the highest amount of latent interest in cryptocurrencies after the United States. 
Meanwhile in Crypto Wonderland....
“BIS Launches a Financial Technology Hub”
The Bank for International Settlements is setting up shop to help officials embrace financial technology, who may need to speed up developing their own digital currency. The BIS, which promotes cooperation among the world’s monetary officials, announced on Sunday it was starting an innovation hub for financial technology. The news comes after Facebook Inc. earlier this month unveiled plans to create a cryptocurrency it expects will one day trade much like the dollar. As head of the Basel, Switzerland-based BIS, Carstens has spoken frequently about the impact of digitization, and has argued there was a strong case for authorities to rein in cryptocurrencies like Bitcoin, which he said wasn’t functional as a means of payment.
“Reddit To Allow Tipping In Crypto”
Native support for cryptocurrency-based tipping is coming to Reddit, for users of the Brave browser. That will come as a big plus to the many diehard crypto-lovin’ Redditors that spend their time crawling its forums on a daily basis. There are so many of these that the biggest crypto subreddit has a subscriber count of more than one million people (or bots)—outnumbering even the Harry Potter subreddit. Reddit already provides some non-native support for tipping. Users are able to create “tip bots” that enable people to pay each other small amounts of some of the most well-known cryptocurrencies. However, they aren’t particularly easy to use, and it can be hard for users to see their balances and cash out.
“Korean Bank To Increase Scrutiny On Crypto Exchange-linked Bank Accounts”
One of South Korea’s biggest banks is planning to intensify regulations on accounts linked to crypto exchanges. The “special measures” Shinhan Bank are proposing would reportedly involve dedicating staff to analyzing account transactions. It is believed the bank is hoping to distance itself from claims that it is helping financial criminals, amid a rise in the number of fraud cases involving exchanges. Later in July, the bank is also hoping to launch an artificial intelligence monitoring system that uses deep learning to identify fraudulent transactions more quickly and accurately.
“Monarch Launches a Crypto Marketplace For 1900 Tokens”
Monarch, a wallet and exchange platform, launched a digital asset marketplace to supports 1,900 separate tokens. The company also announced a partnership with financial-services provider Ambisafe to create a licensed alternative trading system which will enable investment in tokenized entities. A pre-IPO token for SpaceX, representing private shares of the aerospace company, will be offered on the ATS, according to the company. The Monarch Marketplace consolidates a number of services including a decentralized wallet, ERC20 exchange, a portfolio tracker, and universal KYC integration on a platform that also enables financial services like credit purchases of cryptocurrency and offers 7.1 percent APR interest on crypto holdings.
Tweet of the Day
Peter Schiff
How low would Bitcoin's price have to fall for FOMO to become FOLE; “fear of losing everything,” causing hodlers to finally throw in the towel? Or are hodlers so convinced they are right, that they will bravely go down with the ship, and ride Bitcoin all the way down to zero?
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