US Senator Elizabeth Warren has formally questioned Elon Musk regarding the upcoming X Money payments feature expected to be integrated into the X platform. The inquiry centers on whether the service plans to issue its own dollar pegged stablecoin and how it intends to manage financial and security risks.
In a letter sent Tuesday, Warren raised concerns that crypto and stablecoin integrations within X Money could pose risks to the US financial system and national security. She specifically asked whether the platform plans to use provisions under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which allows private companies to issue stablecoins under defined regulatory conditions.
Questions Raised Over Interest Rates and Banking Partnerships
Warren also highlighted reports that an early beta preview of X Money suggests the platform may offer up to 6% interest on deposits, significantly higher than the current federal funds rate range of 3.5% to 3.75%. She questioned how such yields could be supported without relying on high-risk investments or aggressive data monetization strategies.
The senator pointed to X Money’s reported partnership with Cross River Bank, which previously faced enforcement action from the Federal Deposit Insurance Corporation. She asked whether users would be clearly informed that funds held in stablecoin-based services may not be protected under traditional federal deposit insurance.
Regulatory Debate Intensifies Around Stablecoin Protections
The concerns reflect broader debate over consumer safeguards tied to stablecoins issued by private technology firms. Statements from Travis Hill have clarified that stablecoin deposits are not automatically covered by FDIC insurance under the GENIUS Act framework.
While the law does not explicitly ban pass-through insurance coverage, regulators have suggested such arrangements could conflict with the intent of the legislation. Warren’s inquiry signals potential regulatory resistance as technology companies expand into financial services through stablecoin-powered payment platforms.
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