Bitcoin has seen its price drop by more than 20 per cent, to well under $US11,000, after the South Korean Finance Minister said in a radio interview that a ban on trading cryptocurrencies was a live option.
It follows a sell-off last week when the idea of a law to ban trading was first raised by the Minister.
It is the biggest sell-off in bitcoin in at least three years, which peaked at nearly $US20,000 back in December, but it did not suffer as badly as many of its cryptocurrency rivals.
Number two by market capitalisation, Ethereum, dropped by more than 25 per cent while Ripple, the number three, dropped by more than 40 per cent.
In total, there are now more than 1,400 cryptocurrencies being traded in an increasingly crowded space.
The potential impact of a ban in South Korea is expected to be large.
It is one of the biggest markets for trading cryptocurrencies, with college students and housewives all getting in on the action, stoking fears that it has become a type of gambling addiction.
It also follows moves in China to clamp down on trading in digital currencies.
Cryptocurrencies will come to a bad end'
The crash in prices comes soon after the man widely believed to be the world's savviest investor, Warren Buffet, said "I can say almost with certainty that cryptocurrencies will come to a bad end".
It also follows a new report in the Journal of Monetary Economics, suggesting that the early price rises for bitcoin, which initially pushed it over $US1,000, back in 2013 were manipulated by one of two actors.
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