X Money on the Eve of Launch: Musk Dismantles the Referee First

Original Author: Ada, Deep Tide TechFlow

On February 7, 2025, four young men walked into a federal office building in Washington, D.C.

They belonged to DOGE, the "Department of Government Efficiency" led by Elon Musk. Their destination was the headquarters of the CFPB (Consumer Financial Protection Bureau), the agency responsible for regulating all digital payment products in the United States, including Apple Pay, Venmo, Cash App, and the upcoming X Money.

According to Bloomberg, the DOGE team initially received "read-only" access. But late Friday night, Office of Management and Budget Director Russell Vought sent an email requesting broader data access for DOGE. Ninety minutes later, Vought was appointed acting director of the CFPB.

By Sunday, the CFPB was a skeleton. Funds were frozen, activities were suspended, and nearly 90% of employees faced termination.

Nine days earlier, X had just announced its partnership with Visa.

Nine days. From announcing its entry into the game to dismantling the referee, it took just nine days.

The Compliance Marathon and the Nine-Day Blitzkrieg

In 2013, Coinbase registered with FinCEN as a money services business, becoming one of the first crypto companies to proactively embrace federal regulation. That year, Bitcoin was worth less than $200, and the entire industry's market cap couldn't buy a Manhattan apartment.

The next decade was a compliance marathon. Coinbase obtained money transmitter licenses in 49 states and territories, with bond requirements ranging from $1,000 to $500,000 per state and net worth thresholds from $5,000 to $2 million. Applying for New York's BitLicense was particularly grueling, requiring quarterly financial reports and annual independent audits. Coinbase's compliance framework was built around three core pillars: regulatory registration, operational transparency, and proactive engagement with financial regulators, covering over 100 countries.

But the lawsuits still came. In 2023, the SEC sued Coinbase for operating an unregistered securities exchange. The company was forced into a protracted legal battle. The D.C. Circuit Court of Appeals ruled that the SEC "failed to adequately explain its reasoning for denying the rulemaking petition," a half-victory. But what truly made the lawsuit go away was the 2024 U.S. election. Coinbase and the crypto industry's super PAC spent over $130 million on campaigns, with Coinbase alone contributing $75 million. In February 2025, newly appointed SEC Acting Chair Mark Uyeda dismissed the case against Coinbase unconditionally, with no fines and a bar on refiling the same claims.

Ten years of compliance, one lawsuit, $75 million in political donations. That was the price Coinbase paid for the right to operate "legally."

PayPal took a different path, but it was equally costly. In August 2023, PayPal launched its stablecoin PYUSD, issued by Paxos Trust Company, which is regulated by the New York State Department of Financial Services (NYDFS). PYUSD complied fully with the GENIUS Act's requirements for 100% reserve backing and monthly public attestations. Moreover, expanding to each new blockchain (from Ethereum to Solana to Stellar) required NYDFS approval. In December 2025, PayPal claimed PYUSD was the "largest U.S. dollar-backed stablecoin with federal approval."

Those were the rules. To enter the U.S. financial market, you had to get licensed state by state and clear hurdles with one regulator after another. Coinbase took ten years; PayPal spent hundreds of millions on compliance infrastructure.

X Payments LLC also got its licenses. As of May 2025, it held money transmitter licenses in 40 states. On paper, everything was compliant.

But the gap between formal compliance and substantive regulation is vast.

On November 21, 2024, the CFPB finalized a rule to subject large digital payment apps handling over 50 million transactions to federal oversight, similar to how traditional credit cards and bank accounts are regulated. This rule directly covered X Money. Six days later, Musk posted on X: "Delete CFPB."

Three months later, DOGE entered the CFPB. Another three months later, the Senate voted to repeal the CFPB's digital payment oversight rule. On April 9th, the House followed suit.

Coinbase spent ten years, $75 million, and a Supreme Court-level lawsuit to prove its legitimacy within the rulebook. Musk, with one tweet and nine days, dismantled the rulebook itself.

The Cards in the Referee's Hand

Dismantling a regulator was already outrageous. But the story gets even more bizarre.

The CFPB wasn't just a "caretaker"; it held data.

In 2021, to assess consumer protection risks in payment technology, the CFPB issued compulsory data orders to Amazon, Apple, Facebook, Google, PayPal, and Square (now Block). These companies submitted vast amounts of confidential business information, including product strategies, internal operational data, and compliance records. In subsequent years, the CFPB launched investigations or enforcement actions against several of these companies, including PayPal and Cash App.

This data is still in the CFPB's databases.

And the DOGE team got access to "all non-classified databases," including sensitive bank examination records and enforcement records. According to Bloomberg, DOGE employees began accessing systems on the same day they entered CFPB headquarters, before completing the CFPB's required privacy, cybersecurity, and ethics training.

Seth Frotman, former CFPB General Counsel, testified before Congress: "He didn't just get information about consumers; he got information about competitors."

Erie Meyer, former CFPB Chief Technology Officer, recalled five young DOGE team members wandering through the secure executive suite, trying to enter locked offices. She resigned the next day.

Think about what this means. A new player about to enter the payments market got the medical records of all its major competitors before even opening for business: product strategies, operational weaknesses, regulatory issues, undisclosed enforcement actions.

Representative Maxine Waters put it more bluntly during a hearing: "In addition to accessing the consumer data of millions of Americans, Musk can now illegally steal sensitive business information from other American companies in the same industry."

Legal scholar Tim Wu described this level of data access as "god-tier," arguing it creates a "massive competitive advantage" over companies in the same competitive space.

What would happen if the founder of a crypto exchange did the same thing? The SEC files charges, the FBI shows up, the CEO goes to jail. This isn't hypothetical; FTX's Sam Bankman-Fried got 25 years for misusing customer funds.

The difference is: SBF committed crimes *under* the rules; Musk operates *above* them.

The Backdoor in the GENIUS Act

If dismantling the CFPB was the "breaking," then the GENIUS Act was the "building." But this "building" constructed a backdoor.

The GENIUS Act is the U.S. stablecoin regulatory framework signed by Trump. It establishes a basic framework for stablecoin issuance, including reserve requirements, disclosure rules, and regulatory jurisdiction.

But the problem lies in one specific clause.

Senator Elizabeth Warren, in an April 14, 2026, open letter to Musk, pointed out that the GENIUS Act contains a "suspicious exemption clause." This clause allows private commercial companies like X to issue stablecoins without going through some of the approval processes and safeguards required for publicly traded commercial companies.

Warren's question was pointed: Did Musk or his agents participate in lobbying or influencing this exemption clause? Because during the drafting and debate of the GENIUS Act, Musk was serving as a senior advisor to the President while also leading DOGE.

In other words: A person about to launch a stablecoin was sitting in the rulemaker's seat when a favorable exemption clause was being written into the stablecoin law.

Compare this to PayPal's PYUSD. Issued by Paxos, fully regulated by NYDFS, requiring 100% reserve backing, monthly third-party audit attestations, and approval for each new chain. Meanwhile, a draft of the CLARITY Act considered banning "payment stablecoins" from generating yield, directly targeting PYUSD's 4% rewards program.

And what about X Money? It claims 6% APY on deposits and partners with Cross River Bank, a bank previously penalized by the FDIC. Warren questioned in her letter: "In an environment where the federal funds rate is 3.5%-3.75%, how exactly can X Money and Cross River pay a 6% yield? Through high-risk investments, intrusive data monetization, or a gimmick?"

FDIC Chairman Travis Hill stated clearly in March: Under the GENIUS Act framework, stablecoin user deposits are not protected by FDIC insurance.

PayPal spent two years ensuring GENIUS Act compliance, issuing monthly attestations, and waiting for approval on each chain. X Money got a special green lane written for it before it even launched. This is unfair competition.

The Weight of the Rules

In April 2026, X Money entered early public access. 600 million monthly active users, a partnership with Visa, 6% APY, and no federal oversight from the CFPB.

That same month, Coinbase just received conditional approval from the OCC to establish the Coinbase National Trust Company. From registering with FinCEN in 2013 to getting a national trust charter in 2026—thirteen years in total.

Also in April, the CLARITY Act's passage probability in the Senate was 50-50.

The regulatory narrative of the crypto industry for the past decade can be summed up in one sentence: Give us rules, and we will follow them. The premise of this statement is that the rules apply equally to everyone.

But when someone can simultaneously open a backdoor for their own company, dismantle the agency responsible for enforcement, and prepare for launch while holding competitors' confidential data, how much weight is left in the word "rules"?

The deadline for Musk's response to Warren was April 21st. As of press time, Musk has not publicly responded.

And X Money is already live.