US Senator Elizabeth Warren has asked Elon Musk for details on X Money, raising concerns about potential stablecoin use and risks to financial stability.
Warren said the payments feature, expected to be integrated into X, could introduce systemic and national security risks if it includes crypto or dollar-pegged stablecoins.
She questioned whether X could issue its own stablecoin under provisions in the GENIUS Act, which would allow private companies and non-bank entities to create dollar-backed tokens.
“It is unclear what risky investments, intrusive data monetization activities or gimmicks either X Money or Cross River may intend to engage in to pay that yield,”
Warren said.
Warren also flagged concerns about a reported 6% yield on deposits and X Money’s partnership with Cross River Bank, which has previously faced regulatory enforcement action.
The scrutiny highlights growing political resistance to tech companies entering financial services through stablecoin issuance under proposed US legislation.
Warren further questioned whether users would understand that deposits linked to stablecoins would not be protected by government-backed insurance.
According to Travis Hill, stablecoin balances are not covered by FDIC insurance, even though some forms of pass-through protection may technically be possible but remain inconsistent with regulatory intent.