South Korea is planning a law to ban cryptocurrencies such as Bitcoin (Bitcoin) on domestic exchanges, Reuters reported.
The justice minister said virtual currencies were causing the government "great concern".
“There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” Justice Minister Park Sang-ki said at a press conference.
Once a bill is drafted, legislation for an outright ban of virtual coin trading will require a majority vote of the total 297 members of the National Assembly, a process that could take months or even years.
“Cryptocurrency trading becomes akin [to] speculation and gambling . . . it is a risky trading form which can inflict serious financial damage on citizens,” said Mr Park.
The government’s tough stance triggered a selloff of the cyrptocurrency on both local and offshore exchanges.
Bitcoin was down more than 10 percent on the Luxembourg-based Bitstamp at $13,199, after earlier dropping as low as $13,120, its weakest since Jan. 2.
The government had already said in December that it would apply more scrutiny to the exchanges, including moves to curb anonymous trading.