Reuters reported that two of the country's largest exchanges Coinone and Bithumb were raided this week by police and tax agencies on allegations of tax evasion. The justice ministry has been preparing a bill to ban cryptocurrency trading through exchanges after discussion with finance ministry and regulators.
Any bill to ban trading would need to pass the National Assembly, a process that could take many months or years.
Major cryptocurrencies like bitcoin are often traded at a premium on South Korean exchanges, meaning that they are at a higher price versus other exchanges in the US or Europe for example.
Park said the Justice Ministry had been wary of digital money from the start and had repeatedly conveyed such concerns to other government ministries.
As of 4 p.m., Bitcoin was trading at 18.32 million won (US$17,097), down 18 percent from a day before, while other popular virtual coins like Ripple and Etherium tumbled nearly 25 percent. Reuters reports that the local price dropped by 21 per cent at midday trading following Park's comments, and according to BBC News the global price fell by seven per cent.
The country's government is looking to clamp down on cryptocurrencies following a boom in initial coin offerings (ICOs) and trading of cryptocurrencies in the country.
Last month, the South Korean government said it would increase regulation of the cryptocurrency market, including banning anonymous crypto accounts and taking measures to shut down exchanges if necessary.
A Chinese ban on virtual coin transactions in yuan ended up driving many investors underground, exposing them to greater risks, he said.
The price of bitcoin and other cryptocurrencies have fallen on the news, with BTC-USD breaking below the $13,880 support.
He added that it was a misleading idea that virtual currency trades contribute to the development of blockchain technology.
"Virtual currency is not based on an exchange of something with a certain value", he said.
An unidentified spokesman told the Financial Times: "They asked for some data such as cryptocurrency trading volume, our exchange's sales and whether we are paying corporate tax well". In its statement from December, the government hinted at the idea of an outright ban of cryptocurrency exchanges.
The nation's tax office and police declined to confirm whether they raided the local exchanges.