China's Bitcoin exchange awaits clarification regarding the Chinese ban on initial coin offering

Bitcoin. AP.[/caption]Bitcoin fell sharply on Friday after Chinese financial publication Caixin reported that China was planning to shut down local cryptocurrency exchanges, although analysts said this was just a temporary setback.

The news follows China’s move earlier this week to ban so-called “initial coin offerings,” or the practice of creating and selling digital currencies or tokens to investors in order to finance startup projects.

Reuters was not immediately able to verify the report.

A spokeswoman for Beijing-based OK Coin said the platform has not received any notification from regulators.

Spokespersons at Beijing-based Huobi and Shanghai-based BTCC said they were still waiting for further official clarification.

According to earlier reports, Bitcoin's underlying software code could be split on 1 August to create a clone called "Bitcoin Cash," potentially providing a windfall for holders of the digital currency.

The initiative has been led by a small group of mostly China-based Bitcoin miners, who get paid in the currency for contributing computing power to the bitcoin network, who are not happy with proposed improvements to the currency's technology.

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They have initiated what is known as a "fork", where blockchain, a public ledger of all bitcoin transactions, splits into two potential paths, that is set to be activated on 1 August.

With inputs from Reuters