I drank the Kool-Aid. I bought Bitcoin. Ever since my coworkers have been going on and on about how economies are crashing and Bitcoin will be the future, I finally caved and went searching for Bitcoin exchanges available to me in South Korea that I could toss my “snack money” into.
Unfortunately, as a foreigner in Korea, my options were a little limited due to citizenship restrictions, lengthy verification processes, and incompatibility with my Korean bank account. Binance, for example, blocked US citizens from their regular trading platform according to theblockcrypto.com. Etoro.com was a bust as it cannot “accept US citizens who do not live in the US.” And my accounts on Coinbase and Gemini have been pending for-ev-er. Coinbase customers based in Korea also cannot currently add a payment method to their account for buys, sells, withdrawals, and deposits.
Wire Transfer to Overseas Account
If you’re transferring money to a non-Korean Bitcoin Exchange with an overseas bank address, you will probably have to pay additional fees by your bank. Wire transfer to overseas banks may be costly depending on your domestic bank, and you may have to wait for the transfer to clear before receiving your Bitcoin. Also, most international exchanges do not accept KRW, so you’ll have to convert your KRW to USD. You may also have adjustments made to the BTC received due to the amount of time that has passed.
If you’re planning on transferring more than 10,000 USD from South Korea, keep in mind that some banks in South Korea restrict the amount of money wired overseas. Hana Bank, for example, has recently reduced the limit of overseas transfers from 50,000 USD to 10,000 USD. Also, keep in mind that transferring 50,000 USD to/from South Korea within one year will raise some red flags, and you may be asked to provide supporting documents as proof. Any transaction over 10,000 USD will be reported to the Financial Supervisory Service (FSS) by your local bank.
Credit Card or Debit Card
Paying with a credit/debit card may also come with high fees and surprise charges as most exchanges will charge up to 5% in fees through third-party payment providers. Why the high fees? Debit cards are reversible and have a high risk of fraud.
Keep in mind that a lot of international cryptocurrency exchanges have issues processing payments with domestic Korean debit or credit cards. Your Korean bank may also block the payment.
Domestic Bank Transfer
This one is tricky because you’ll have to find a local Korean cryptocurrency exchange that accepts domestic bank transfers from foreign residents. The only Korean cryptocurrency exchange that allows foreign residents of South Korea to link their bank account for domestic bank transfer is Gopax. On the plus side, there are no fees in depositing your Korean won to the Gopax exchange platform.
Why I Can’t Use Binance, But You May Be Able To
Though Binance is not a South Korean cryptocurrency exchange platform, it’s worth mentioning. Binance initially started in China but has since moved on to Malta and then now rumored to be in the Cayman Islands. It’s considered one of the more popular trading platforms due to its low fees.
If you’re not an American, you can sign up for a Binance.com account. If you are an American (like me), you’re mostly SOL. Americans have to sign up for Binance.us which can be difficult for Americans residing in South Korea since you have to verify a US address.
The fee schedule varies on your account level. At the most basic account level, the standard taker and maker fee is 0.1%. The withdrawal fee for Bitcoin is 0.0005 BTC. You can also view the Binance US Fee Schedule which mentions their 0.5% Instant Buy/Sell fee. Paying by debit/credit card comes with a 3.5% fee.
Keep in mind that a few of my Korean friends have mentioned that they are no longer able to use their credit/debit cards with Binance due to local Korean banks blocking the transactions, and they have to start using local Korean cryptocurrency exchanges instead.
Requirements for Foreigners to Use Korean Cryptocurrency Exchanges
After 2017, foreigners were no longer allowed to deposit Korean won into domestic (Korean) cryptocurrency exchanges with the exception of one exchange, Gopax. You can read more about why in this Forbes article published in 2018.
Take note that you are only allowed to use Korean cryptocurrency exchanges if you are a legal resident of South Korea. You must have a valid Korean phone number and a government-issued resident card. Fiat currency exchange is also limited to those using domestic (Korean) banks.
After verifying your account, you can easily deposit Korean won directly from your Korean bank account through domestic transfer. The verification was easy and instantaneous as I connected my Korean phone number and submitted my ARC card number.
|Name||Withdrawal Fees (BTC)||Withdrawal Fees (KRW)||Maker Fee||Taker Fee|
|Coinone||0.0015 BTC (minimum 0.0001 BTC)||1,000 KRW (minimum 5,000 KRW)||0.2%||0.2%|
|Korbit||0.001 BTC (minimum 0.0001 BTC)||1,000 KRW||0.15%||0.15%|
|Bithumb||0.001 BTC (discount coupons available)||1,000 KRW||0.25%||0.25% (discount coupons available)|
|Gopax||0.001 BTC||1,000 KRW||0.2%||0.2%|
|UPbit||0.0009 BTC||1,000 KRW||0.25%||0.25%|
|Huobi||0.0005 BTC||1,000 KRW||0.1%||0.1%|
Keep in mind that withdrawal fees for BTC at Gopax, Korbit, and Bithumb are 0.001 BTC if you ever want to move your Bitcoin out of their wallets which is high at around $46 USD (as of Feb 10, 2021 at 12:14 AM.) A 1,000 KRW fee for withdrawing Korean currency is pretty standard among the exchanges. They also charge between 0.1% to 0.25% when doing any trading.
You’re Going to Want to Sign Up for Gopax
The easiest platform for me to use in South Korea as an American was Gopax since they have support available in English and Korean. As far as I know, Gopax is also the only cryptocurrency exchange platform in Korea that foreigners can link their domestic (Korean) bank account to. Domestic wire transfers are, fortunately, almost instantaneous and inexpensive, so you’re also more likely to receive your Bitcoin immediately.
You can still sign up for accounts on the other Korean platforms, but you’ll face difficulties when trying to deposit Korean won.
New York-based, DCG (Digital Currency Group), who also owns the popular crypto news, CoinDesk, has recently become the second-largest shareholder of Streami, the parent company of Gopax. You can read more at CoinDesk article, “Digital Currency Group Invests in South Korean Crypto Exchange.”
Most importantly, “The investment suggests DCG is not concerned that Gopax will be hurt by the country’s increased scrutiny of the crypto industry.” The investment is also mentioned in this Pulse News article, “Korean crypto platforms strive to turn more reliable with global partner, protection” as well as this Mega Economy article, “외국계 가상자산 투자사 DCG , 한국 중소 거래소에 투자한 이유” (Why did DCG, a foreign virtual asset investor, invest in Korean small and medium-sized exchanges?)
Not Your Keys, Not Your Coins
Cryptocurrency Tax in South Korea
According to Coindesk, there’s a new tax plan on its way in South Korea for 2022. It’s definitely worth visiting the article from Coindesk Korea, if only to read the angry comments. After 2022, you’ll have to file your taxes accordingly and will have to pay a 20% tax on any profits exceeding 2.5 million won when trading Bitcoin. You can use Google Translate on Chrome Browser to translate the article to your native language.
From January 1, 2022, those who earned profits from cryptocurrency investments must pay 20% of the profits exceeding 2.5 million won per year as other income tax.— Coindesk Korea
On March 11th, 2021, Korea JoongAng Daily published the article, “Bitcoin exchanges to be subject to heavy fines by FSS”, in which cryptocurrency exchanges are under scrutiny. They also added that in addition to the 20% tax mentioned above, there will be a 50% inheritance tax imposed on any cryptocurrency assets.
And if you’re thinking about being a sneaky little bugger and hiding all your money in cryptocurrency in Korea without paying taxes, I’d rethink your strategy. According to another article, “National Tax Service targets cryptocurrency for the first time”, the Korean government has and will investigate unpaid taxes in cryptocurrency. The Korea Herald also mentions their ongoing investigation in “Korea toughens rules on cryptocurrency amid market frenzy.”
After March 25th, 2021, new cryptocurrency regulations will also require local cryptocurrency exchanges to use real-name verification and report all suspicious activity to the Korean government according to the Korea JoongAng Daily article, “New cryptocurrency rules in effect from March 25.”
The Kimchi Premium
According to CryptoNews.com on April 5th, 2021, bitcoin prices in South Korea are up around 12% compared to exchanges outside of South Korea. If you’re buying bitcoin in South Korea, you may or may not have heard of the kimchi premium. This so-called premium is a higher-than-average price of bitcoin available on South Korean cryptocurrency exchanges versus other global exchanges. In 2017, the kimchi premium in South Korea surged as high as 20%. You can read more about the history, capital controls in South Korea, currency arbitrage, and the effects of kimchi premium on Investopedia.
In this article from UPI in April 2021, “Speculators in South Korea’s crypto markets caught buying apartments illegally”, be aware that the South Korean government is actively cracking down on those trying to take advantage of the Kimchi Premium. “The transfer of money from the cryptocurrency market to other markets is illegal in Korea, according to the customs service.”
Looming Regulations on Cryptocurrency Exchanges in South Korea
If you’ve been following cryptocurrency news in South Korea, you may have heard about the regulations on cryptocurrency exchanges that are just around the corner in September 2021. The Korean government will require cryptocurrency exchanges to register with the Korea Financial Intelligence Unit, partner with a local bank, and require real-name verification for users and deposit insurance for the exchange.
Local banks are hesitant to partner with high-risk cryptocurrency exchanges due to fears of money laundering and other illegal activities that could put them in hot water. Offering too many altcoins, for example, is deemed risky.
There is a detailed article on the Diplomat from July 3rd, 2021, explaining this in “South Korea Tightens Regulations on Cryptocurrencies.”
Whether or not many cryptocurrency exchanges in South Korea will survive these regulations, we’ll have to see by the end of the year. Since DCG (Digital Currency Group) has become the second-largest shareholder of Streami, the parent company of Gopax, one would hope. Nevertheless, Gopax still remains the only cryptocurrency exchange in South Korea that we as legal foreign residents can really use.
MORE READING: “Korea may join with Japan, UK to regulate Binance”, “S. Korea’s cryptocurrency exchanges busy reshuffling coins before scrutiny in Sept”, “Crypto exchanges with ‘too many’ coins likely to be denied real-name accounts”, “BNK Bank turns down partnership with cryptocurrency exchanges”, “South Korea is open to cryptocurrencies and making an effort to regulate them, but crypto exchanges still aren’t happy”, “Crypto exchanges required to reduce trading irregularities”, “‘Banks responsible for crypto irregularity screenings'”, “South Korea seizes crypto assets in clampdown on ‘tax dodgers’”, “‘Only 4 Korean Exchanges to Be Left Standing’ in September, Warn Banks”, “More altcoins tossed overboard as banking deadline looms”, “Banks in South Korea Instructed to Treat Crypto Exchanges as High-Risk Clients”, “South Korea’s 4 Biggest Crypto Exchanges to Adopt FATF’s Travel Rule”, “Banks ask not to be held accountable for crypto fraud”