Cryptocurrency and financial industry leaders have raised concerns about Elon Musk’s proposed X Money. This includes Senator Elizabeth WarrenA member of the Senate Banking Committee, who warned that this move would threaten financial stability.
Senator Elizabeth Warren questions Elon Musk’s X money
Senator Warren wrote message To Elon Musk in which she raised concerns about the proposed launch of the payments platform in April, X money. She stated that developments around the launch of the payments platform raise major concerns at the consumer level, financial stability, and national security.
As part of these concerns, the senator noted that X Money may cooperate with Cross River Bank, which was the subject of serious enforcement action by the FDIC in 2023 for unsafe and unsound practices. It also highlighted X Money’s preview materials, which indicate that users can earn up to 6% APY on deposit accounts. Warren said it’s unclear what risky investments they plan to pursue to earn that return when The federal funds rate By 3.75%.
Senator Warren also raised concerns about X’s record of allowing sanctioned individuals such as Hezbollah and the Houthis to purchase verified accounts and raise funds through the platform. She added that there were also systemic failures in handling child sexual abuse material, data privacy breaches, and widespread fraud by verified users.
Meanwhile, the senator warned of Musk’s potential role in shaping the regulatory environment for his own financial product, as X Money may include issuing stablecoins. She alluded to The law of geniuswhich Warren noted includes a “dubious carve-out” 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 to launch X Money and the risks the product might pose to consumers, financial stability and national security. X has a deadline of April 21 to submit this written response.
Threat to other competitors
Cryptocurrency expert Tat Thang noted in an article Share X X Money and other financial offers from the social media platform pose a major threat to fintech. The cryptocurrency expert highlighted the financial stack of X, including Smart cash tagswhich aired earlier this week. With this feature, users will be able to search for the ticker of any asset and view real-time data about the asset without leaving the X app.
Thang also noted that X has launched its brokerage routing via Wealthsimple, which has already been activated. At the same time, X Money is in betawhere Musk revealed that the payments platform could be launched publicly as soon as this month. The critic stated that fintech companies 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 product within the app that people already live in.
Featured image of X, chart from Tradingview.com
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