Bitcoin bucks ‘law of one price’ to regulators’ dismay

TOKYO — The vastly different price of digital currencies between countries and exchanges has led investors to seek out arbitrage opportunities with greater zeal, a trend that has caught the eye of financial watchdogs around the world.

The price of bitcoin in South Korea is relatively high compared to other markets, a gap known as the “kimchi premium.” When the price of bitcoin soared in January, 1 bitcoin was worth about 2 million yen in Japan but the equivalent of about 2.6 million yen in South Korea. That’s a premium of 30%, though the kimchi premium has reached as high as 50% at times.

“At first, I couldn’t believe that its value would jump as much as 10% just by sending it” to another country, said a South Korean man in his 20s who works in Japan. He became engrossed by bitcoin in May 2017 when he repaid a friend from home about 500,000 yen ($4,500) in bitcoin because the remittance fees are cheap. The price of bitcoin in won was 10% higher than in yen.

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