Investing.com - The prices of major cryptocurrencies, including bitcoin, ripple and ethereum fell sharply on Thursday following reports that South Korea may be preparing to ban all virtual currency trading in the country.

Bitcoin was trading at $13,410 by 05:41 AM ET (10:41 AM GMT) on the Bitfinex exchange after falling as low as $13,339 earlier. That pushed bitcoin’s market capitalization down to $230 billion.

Ethereum, the world’s second largest cryptocurrency by market cap, hit a low of $1,100.00 on the Bitfinex exchange before pulling back to trade at $1,203.50.

Meanwhile, Ripple's XRP token was trading at $1.71 on the Poloinex exchange after falling as low as $1.53 earlier.

Prices plummeted after South Korea’s justice minister said Thursday the government is preparing a bill to ban trading of virtual currencies on domestic exchanges. The country is one is one of the largest markets for major coins like bitcoin and ethereum.

Cryptocurrency trading in South Korea is highly speculative and digital currencies are often traded at a premium, meaning that they are priced significantly higher in the country's exchanges than elsewhere in the world.

Cryptocurrency prices had already come under pressure earlier in the week after website CoinMarketCap moved to exclude prices from South Korean exchanges from its calculations of digital currency prices, citing "extreme divergence in prices from the rest of the world."

News of the proposed ban comes after South Korea’s largest cryptocurrency exchanges were raided by police and tax agencies earlier this week for alleged tax evasion.

South Korean financial authorities had previously said they are inspecting six local banks that offer virtual currency accounts to institutions, amid concerns the increasing use of such assets could lead to a surge in crime.

A report earlier this week that the Chinese government is considering further action to stamp out cryptocurrency mining has also pressured prices.

On Wednesday, billionaire investor Warren Buffett said that he would never invest in bitcoin or other cryptocurrencies and predicted the wildly popular assets are in for a fall.

“I can say almost with certainty that cryptocurrencies will come to a bad end,” Buffett told CNBC in an interview.

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