SEOUL: Bitcoin and other virtual currencies were sent on rollercoaster rides in South Korea Thursday as the government said it was planning to ban cryptocurrency exchanges, before later backtracking.

Justice Minister Park Sang-Ki said Seoul was preparing a bill to shut down the country's virtual coin exchanges, sending bitcoin and other virtual unit prices into a tailspin.

"The ministry is preparing legislation that basically bans any transactions based on a virtual currency through the trading floor," he told journalists.

Authorities had "grave concerns" over the craze and were "aiming to close virtual currency exchanges" in the country, he said.

"It has started to resemble gambling and speculation," Park added, citing the fact that bitcoin prices are higher in South Korea than globally -- the so-called "kimchi premium".

The hyper-wired South has emerged as a hotbed for cryptocurrency trading, accounting for some 20 percent of global bitcoin transactions -- about 10 times the country's share of the world economy.

A series of measures have failed to curb overheated virtual currency speculation in the country and Park said it would be "devastating if the bubble bursts".

His remarks sent bitcoin prices plunging 18 percent on South Korean exchange Bithumb, while ethereum slumped 23 percent.

Investors flooded the presidential Blue House website with hundreds of online petitions against the shutdown, which was swiftly reversed.

A shutdown was "one of the measures that have been prepared by the justice ministry", chief press secretary Yoon Young-Chan said in a statement, "but it is not a finalised decision".

Cryptocurrencies rapidly reversed course, with bitcoin climbing back to trade just 6.5 percent down, and ethereum off 12 percent.