Today in crypto, Plasma founder Paul Faecks denied insider selling accusations after the XPL token plummeted over 50%, Swedish members of parliament have proposed that the country look into establishing a Bitcoin reserve, and US lawmakers are weighing changes to crypto tax rules.

Plasma founder denies insider selling after XPL token plunges over 50%

Plasma founder Paul Faecks denied accusations of insider selling after the project’s native token, XPL, dropped by more than half its value over the weekend.  

On Thursday, Faecks rejected speculation that the team offloaded tokens into the market, stressing that investor and team allocations remain locked for three years with a one-year cliff. “No team members have sold any XPL,” he said.

Plasma officially launched its mainnet beta along with its native Plasma (XPL) token on Sept. 25. The layer-1 blockchain is designed to make stablecoin payments cheaper and faster.

Following the launch, XPL spiked to almost $1.70 on Sunday before tumbling steadily to $0.83 by Wednesday, erasing more than 50% of its value, according to TradingView data.

Because of the dramatic drop, many community members suspected that the team may have engaged in time-weighted average price (TWAP) selling. In this algorithmic strategy, a large sell order is broken down into smaller, equally sized orders, each executed at regular time intervals. 

Community members quickly turned to onchain analysis to investigate the flows of XPL following the dump.

Independent sleuth ManaMoon pointed to movements from the Plasma team vault. The community member said that the wallet sent more than 600 million XPL tokens to exchanges in the days leading up to the launch. 

Sweden eyes entering the Bitcoin “digital arms race”

Two members of Sweden’s parliament, the Riksdag, have proposed that the country investigate establishing a strategic Bitcoin reserve to tackle inflation and diversify its holdings.

In their proposal to the Riksdag on Wednesday, Swedish Democrats Dennis Dioukarev and David Perez said that, given other countries like the US are already in the process of creating a reserve, Sweden should “participate in this digital arms race and join the growing group of nations that have accepted and recognized the potential of Bitcoin.”

Similar to the US, Dioukarev and Perez have floated the idea of funding the reserve through seized Bitcoin, but said the decision on which authority will manage the Bitcoin (BTC) is an “open question,” for now.

US lawmakers grapple with crypto tax policy amid government shutdown

US lawmakers debated crypto tax policy at Wednesday’s Senate Committee on Finance hearing, including possible tax exemptions for crypto transactions below a certain threshold and how income from staking services should be classified.

Lawrence Zlatkin, the vice president of tax at crypto exchange Coinbase, urged the Senate committee to consider a de minimis tax exemption for cryptocurrency transactions under $300 to encourage commercial use in payments and ensure innovation occurs inside the US. Zlatkin said:

“The guiding principle is simple parity with traditional finance. The same tax rules should apply to the same economic activity, whether it involves commodities, stocks, or tokens on a blockchain. Right now, that parity does not exist. The lack of tailored rules has real consequences.”

Lawmakers also grappled with how to close the annual tax gap of about $700 billion through enforcing tighter reporting requirements for cryptocurrency transactions, minimizing tax exemptions, and potentially classifying revenue from staking services as earned income subject to taxation under the tiered income tax system.

Tax policy is a major issue for cryptocurrency users, industry executives, and companies who are left uncertain about the implications of their activities and whether the Internal Revenue Service (IRS) will penalize them for engaging with the digital economy.