South Korea's finance minister on Friday said that relevant officials need to hold more consultations over the justice ministry's plan to ban cryptocurrency exchanges in the country.
"All government ministries agree on the need for a government response to an overheating in cryptocurrency speculation and for a degree of regulation," Minister Kim Dong-yeon told reporters, according to news agency Yonhap.
"The issue of banning exchanges that the justice minister talked about yesterday is a proposal by the Justice Ministry and it needs more coordination among ministries," Kim added.
He also said that discussion was under way on how the government could reasonably regulate cryptocurrency trading that's overheating with irrational and speculative behavior, Yonhap reported. Kim said "a balanced perspective is necessary because blockchain technology has high relevance with many industries such as security and logistics."
Kim's comments followed news that the country's justice ministry appeared to have softened its stance after remarks from its chief on Thursday saw billions wiped off the global cryptocurrency market.
The justice ministry explained, according to Yonhap, that the ban was not a done deal in a text message to reporters on Thursday.
"The ministry has been preparing a special law to shut down all cryptocurrency exchanges, but we will push for it after careful consideration with related government agencies," the justice ministry said.
CNBC reached out to the justice ministry for further clarification, but did not immediately hear back.
On Thursday, Justice Minister Park Sang-ki said at a press briefing that there were "great concerns regarding virtual currencies" and that the ministry was "basically preparing a bill to ban cryptocurrency trading through exchanges."
Park said he couldn't disclose more specific details about a proposed shutdown of cryptocurrency trading exchanges in the country, adding that various government agencies would work together to implement several measures.
News of his ministry's plans roiled the cryptocurrency market and bitcoin price fell as much as 12 percent in the aftermath.
Later in the day, however, South Korea's presidential office emphasized that any potential bill is not a final measure.
"Justice Minister Park Sang-ki's remarks regarding the shutdown of cryptocurrency exchanges is one of the measures that have been prepared by the Justice Ministry, but it is not a finalized decision and will be finalized through discussion and a coordination process with each government ministry," the chief press secretary to President Moon Jae-in said in a statement reported by Yonhap.
Even if a bill aiming to ban all cryptocurrency trading is drafted, it will require a majority vote in the country's National Assembly before it can be enacted into law. That process could take months — or even years.
On Friday afternoon at 12:42 p.m. HK/SIN, bitcoin traded at $13,613.99 and ethereum traded at $1,205.83, according to CoinDesk data.
South Korea is one of the biggest markets for major coins like bitcoin and ethereum.
According to industry website CryptoCompare, more than 11 percent of ethereum is traded against the South Korean won — the second largest concentration in terms of fiat currencies behind the dollar. Meanwhile, around 5 percent of all bitcoin are traded against the won.
One industry player told CNBC's "Squawk Box" on Friday morning that he didn't think South Korea would actually ban cryptocurrency trading in the country.
"(South) Korea is the third-largest bitcoin trading market in the world after Japan and the U.S.," Dave Chapman, managing director at Hong Kong-based commodities and digital assets trading house Octagon Strategy, said.
"Given the acceptance of cryptocurrency as a whole, and now its further adoption, and the appreciation of the entire market, it's hardly surprising to think that regulators are looking at this with some scrutiny," he added.
Chapman explained that it's understandable that regulators are looking closely at what's happening in the cryptocurrency space.
"From a regulator's perspective, they are trying to do the right thing. It's about consumer protection and given that the heightened sort of fever in this asset class, it is right that they're looking into this further," he said.
Cryptocurrency trading South Korea is very speculative and the prices of bitcoin, ethereum and other coins are significantly higher than elsewhere in the world. Authorities have taken steps in recent months to limit speculation in the market, including prohibiting cryptocurrency exchanges from issuing new trading accounts.
Last month, the government also said it would consider taxing capital gains from trading of virtual coins, according to Reuters.
— CNBC's Chery Kang and Reuters contributed to this report.