Crypto and financial industry leaders have raised concerns over Elon Musk’s proposed X Money. This includes Senator Elizabeth Warren, a member of the Senate Banking Committee, who warned that the move will threaten financial stability.
Senator Elizabeth Warren Questions Elon Musk’s X Money
Senator Warren wrote a letter to Elon Musk in which she raised concerns about the proposed April launch for the payments platform, X Money. She stated that developments around the launch of the payments platform raise significant consumer, financial stability, and national security concerns.
As part of these concerns, the senator noted that X Money may partner with Cross River Bank, which was subject to a serious enforcement action by the FDIC in 2023 for unsafe and unsound practices. She also highlighted X Money’s preview materials, which suggest that users can earn up to 6% APY on deposit accounts. Warren said it is unclear what risky investments they plan to pursue to earn this yield when the Federal funds rate is at 3.75%.
Senator Warren also raised concerns over X’s record of allowing sanctioned individuals like Hezbollah and the Houthis to purchase verified accounts and raise funds through the platform. She added that there have also been systemic failures to address child sexual abuse material, data privacy violations, and widespread fraud by verified users.
Meanwhile, the senator warned about Musk’s potential role in shaping the regulatory environment for his own financial product, as X Money may include stablecoin issuance. She alluded to the GENIUS Act, which Warren noted includes a “suspicious carveout” that enables companies like X to issue a stablecoin without some of the required approvals and guardrails that apply to companies like X.
Senator Warren requested a written response detailing Musk’s plans for the launch of X Money and the risks that the product may pose to consumers, financial stability, and national security. X has a deadline of April 21 to submit this written response.
Threat To Other Competitors
Crypto pundit Tat Thang noted in an X post that X Money and other financial offerings from the social media platform pose a huge threat to fintechs. The crypto pundit highlighted X’s financial stack, including Smart Cashtags, which went live earlier this week. With this feature, users will be able to search for any asset’s ticker and view real-time data about the asset without leaving the X app.
Thang also noted that X has launched Brokerage routing via Wealthsimple, which is already live. At the same time, X Money is in beta, with Musk revealing that the payments platform could launch publicly as soon as this month. The pundit stated that fintechs like Robinhood cannot compete with X because the social media platform has 550 million monthly users. He added that X doesn’t need the best product, but simply a good-enough one within the app people already live in.
Featured image from X, chart from Tradingview.com
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