What Was the ‘Kimchi Premium’ and How Was It an Example of Regulatory Arbitrage?

The 'Kimchi Premium' was a well-known phenomenon where the price of Bitcoin in South Korea was consistently higher than on global exchanges, sometimes by as much as 30-50%. This price gap was a direct result of South Korea's strict capital controls and financial regulations, which made it very difficult for residents to move large amounts of Korean Won out of the country to buy cheaper Bitcoin elsewhere.

This created a persistent arbitrage opportunity that was difficult to close due to the regulatory friction, making it a prime example of regulatory-driven market inefficiency.