At around 4.50 a.m. London time, a few minutes after news, over $106 billion of value was wiped off of the entire cryptocurrency market when compared to the market capitalization at the beginning of the day on Thursday.
South Korea is a crucial source of global demand for cryptocurrencies like Bitcoin.
South Korea's largest cryptocurrency exchanges such as Coinone and Bithumb were raided by police and tax agencies this week for alleged tax evasion. Investors must be wishing the plans to ban cryptocurrency in South Korea should never come to fruition. Bitcoin prices in the country are persistently higher than those in the U.S.
The prices of bitcoin suffered a big fall today after South Korea said it was preparing a bill to ban trade in the cryptocurrency.
Ripple's currency XRP fell more than 30 per cent on the day, after hitting an all-time peak of around $3.84. It accounts for somewhere in the region of 6 percent to 12 percent of bitcoin trading, according to industry website CryptoCompare.
Still, some cryptocurrency enthusiasts saw the move as a positive sign for the market.
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Once a spectator on the sidelines, the government has gradually become an influencer in the game, introducing regulations via a special task force and ramping up pressure on commercial banks to kill cryptocurrency transactions.
Chinese regulators began their own crack down on cryptocurrency exchanges in 2017. Bitcoin, for instance, has traded at a more than 40% premium on exchanges in the country relative to United States exchanges.
Later in December, a ban was placed on anonymous cryptocurrency trading accounts, a measure that was meant to reduce the use of crypto for illicit purposes and instances of minors trading on crypto exchanges.
Still, notable Wall Streeters such as JPMorgan chief executive Jamie Dimon have said governments would be bitcoin's main impediment. "Governments like to know where the money is, who has it and what you're doing with it, in case you haven't noticed". The virtual coin market has emerged as a breakthrough of technology over the past year.
"I have already cashed most of mine (virtual coins) as I was aware that something was coming up in a couple of days", said Eoh Kyung-hoon, a 23-year old investor.
Financial Services Commission head Choi Jong-ku foreshadowed the impending wave of government involvement at a press conference on January 8.