US Senator Elizabeth Warren (D-MA) has issued a stern warning about the planned April launch of Elon Musk's X Money payment platform, expressing significant concerns about consumer protection, national security, and the stability of the financial system. In a letter sent to Musk on Tuesday, Warren questioned the safety and responsibility of expanding X into consumer finance, citing Musk's track record with the social media platform X (formerly Twitter).
Warren highlighted that X, through its subsidiary X Payments, has already secured 40 state money transmitter licenses. Preview materials for X Money suggest it will offer deposit accounts with yields of up to 6% APY, a rate significantly above the current Federal Funds Rate range of 3.5-3.75%. The Senator questioned what "risky investments, intrusive data monetization activities or gimmicks" would be used to generate such a yield.
A major point of contention is X Money's potential partnership with Cross River Bank, a financial institution that faced enforcement actions from the Federal Deposit Insurance Corporation (FDIC) in 2018 and 2023 for unsafe lending and deceptive practices. Warren also raised alarms about a "suspicious carveout" in the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act), which she argues allows private companies like X to issue stablecoins without the required approvals and guardrails that apply to public commercial companies.
The letter underscores a transformed regulatory landscape. Warren noted that during Musk's tenure as a senior adviser to President Trump, the administration worked to restructure the Consumer Financial Protection Bureau (CFPB), the agency that would normally oversee products like X Money. Furthermore, FDIC Chair Travis Hill clarified in March that under the GENIUS Act, stablecoin user deposits are not protected by FDIC insurance, though the act does not expressly prohibit pass-through insurance.
While X Money launched in a limited beta with Visa last year and has introduced "smart cashtags" for trading stocks and crypto from the X timeline, the platform has not confirmed direct crypto payment functionality. However, speculation—particularly around Musk's endorsement of Dogecoin (DOGE)—has fueled market debate and price action. Warren's letter signals potential pushback from US lawmakers against private companies issuing stablecoins under the new regulatory framework.
