On the eve of X Money's launch, Musk first dismantled the referee

By Ada, Deep Tide TechFlow

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

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 regulates all digital payment products in the U.S., including Apple Pay, Venmo, Cash App, and the upcoming X Money.

According to Bloomberg, at first the DOGE team only had “read-only” access. But late Friday night, Russell Vought, Director of the Office of Management and Budget, sent an email ordering broader data access for DOGE. Ninety minutes later, Vought was appointed Acting Director of the CFPB.

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

And nine days earlier, X had just announced a partnership with Visa.

Nine days. From announcing participation to dismantling the referee, it only took nine days.

Compliance Marathon and a Nine-Day Lightning War

In 2013, Coinbase registered with FinCEN as a money services business, becoming one of the first crypto companies to actively embrace federal regulation. That year, Bitcoin was still under $200, and the total market value of the entire industry wasn’t enough to buy a Manhattan apartment.

The next ten years turned into a compliance marathon. Coinbase obtained money transmitter licenses in 49 states and territories; the required bond amounts ranged from $1,000 to $500,000, and the net worth thresholds ranged from $5,000 to $2,000,000. Applying for New York State’s BitLicense was especially torturous, 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 more than 100 countries.

But lawsuits still came. In 2023, the SEC sued Coinbase for “operating an unregistered securities exchange.” The company was forced into a prolonged legal battle. The Third Circuit Court of Appeals ruled that the SEC “did not adequately explain why it declined to issue rules,” which was a partial victory. But what truly caused the lawsuit to be withdrawn was the 2024 U.S. presidential election. Coinbase and the crypto industry’s super PAC spent more than $130 million to support campaigns, with Coinbase alone contributing $75 million. In February 2025, Mark Uyeda, the newly appointed Acting Chair of the SEC, withdrew the case against Coinbase unconditionally—without penalties, and without any further ability to sue again on the same grounds.

A decade of compliance, a lawsuit, and $75 million in political donations—that was the price Coinbase paid for the words “lawful operation.”

PayPal took a different route, but it was just as expensive. In August 2023, PayPal launched the stablecoin PYUSD, issued by Paxos Trust Company, which is regulated by the New York State Department of Financial Services. The GENIUS Act (U.S. Stablecoin Regulation Bill) requires 100% reserve backing and monthly public attestations, and PYUSD fully complied. Moreover, each time it expanded to a new blockchain (from Ethereum to Solana to Stellar), it required NYDFS regulatory approval. In December 2025, PayPal claimed that PYUSD is the “largest U.S. dollar stablecoin approved at the federal level.”

So that’s how the rules are set. To enter the U.S. financial market, you need to obtain licenses state by state and clear each regulator one by one. Coinbase spent ten years building compliance infrastructure, while PayPal spent hundreds of millions of dollars.

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

But the gap between formal compliance and substantive regulation is not just a little.

On November 21, 2024, the CFPB finalized a rule to impose federal regulation on large digital payment applications handling more than 50 million transactions—regulating them the same way it regulates traditional credit cards and bank accounts. This rule directly covered X Money. Six days later, Musk posted one sentence on X: “Delete CFPB.”

Three months later, DOGE moved into the CFPB. Another three months after that, the Senate voted to revoke the CFPB’s digital payment regulatory rule. On April 9, the House followed suit.

Coinbase spent ten years, $75 million, and a Supreme Court-level lawsuit to prove that it was lawful within the rule framework. And Musk used a tweet and nine days to dismantle the framework itself.

The Dealer’s Trump Card

Dismantling a regulatory agency is already outrageous enough. But there’s an even more outrageous part of the story.

The CFPB is not a “guardian”—it has the data.

In 2021, the CFPB issued compulsory data requests to Amazon, Apple, Facebook, Google, PayPal, and Square (now Block) in order to assess consumer protection risks of payment technologies. These companies submitted large amounts of confidential business information, including product strategies, internal operations data, and compliance records. In the following years, the CFPB launched investigations or enforcement actions against several of those companies, including PayPal and Cash App.

Those data are still in the CFPB’s database.

And the DOGE team gained access to the “entire non-confidential database,” including sensitive bank review records and enforcement records. According to Bloomberg, DOGE employees began accessing the systems on the same day they entered the CFPB headquarters, and they had not completed the privacy, cybersecurity, and ethics training required by the CFPB.

When testifying before Congress, Seth Frotman, the former Chief Legal Officer of the CFPB, said: “He not only obtained information about consumers, but also information about competitors.”

Erie Meyer, the former CFPB Chief Technology Officer, recalled that five young members of the DOGE team wandered around in the security administrative suite, trying to access locked offices. She resigned the next day.

Think about what that means. A new player about to enter the payments market had already gotten the health check reports of all major competitors before even opening for business: product strategies, operational weaknesses, regulatory issues, and undisclosed enforcement information.

Rep. Maxine Waters was even more direct at the hearing: “Besides obtaining consumer data on millions of Americans, Musk can now illegally steal other U.S. companies’ sensitive business information in the same industry.”

Legal scholar Tim Wu described this level of data access as “god-tier,” saying it provided a “huge competitive advantage” over companies in the same competitive arena.

If a crypto exchange founder did the same thing, what would happen? The SEC would file charges, the FBI would show up, and the CEO would go to jail. This isn’t hypothetical—Sam Bankman-Fried of FTX was sentenced to 25 years for misappropriating customer funds.

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

The GENIUS Act Backdoor

If dismantling the CFPB is a “break,” then the GENIUS Act is a “build.” Only, this “build” built in a backdoor.

The GENIUS Act is a U.S. stablecoin regulation law signed by Trump. The law establishes the basic framework for stablecoin issuance, including reserve requirements, information disclosure, and a division of regulatory jurisdiction.

But the issue lies in one clause.

In a public letter to Musk on April 14, 2026, Senator Elizabeth Warren pointed out that the GENIUS Act contains a “suspicious exemption clause,” allowing private commercial companies like X to issue stablecoins without some of the approval procedures and safeguards required for publicly listed companies.

Warren’s question cuts to the bone: Did Musk or his representatives lobby for or influence that exemption clause? Because during the drafting and debate of the GENIUS Act, Musk was serving as a senior presidential advisor and leading DOGE.

In other words: Someone who was about to issue a stablecoin sat in the rulemaker’s seat when favorable exemption language was written into the stablecoin bill.

Compare PayPal’s PYUSD. Issued by Paxos, it is fully regulated by NYDFS, requires 100% reserve backing, and includes monthly third-party audit attestation; every time it expands to a new chain, it needs approval. But the draft of the CLARITY Act considered banning “yield-generating payment stablecoins,” directly targeting PYUSD’s 4% reward program.

And what about X Money? It claims a 6% APY on deposits, and its partner bank is Cross River Bank, which had previously been penalized by the FDIC. In her letter, Warren asked: “In an environment where the federal funds rate is 3.5%-3.75%, how exactly do X Money and Cross River plan to pay a 6% yield? Through high-risk investments, invasive data monetization, or hype?”

FDIC Chair Travis Hill had already made it clear in March: under the GENIUS Act framework, stablecoin users’ deposits are not protected by FDIC insurance.

PayPal spent two years complying with the GENIUS Act—issuing attestations every month, and getting approvals for each chain. Before X Money even launched, it already had a special green lane created specifically for it. That’s unfair competition.

The Weight of the Rules

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

In the same month, Coinbase had just received conditional approval from the OCC to set up Coinbase National Trust Company. From registering with FinCEN in 2013 to obtaining approval for a national trust company in 2026 took thirteen years.

Also in April, the CLARITY Act had a 50-50 chance of passing in the Senate.

The regulatory narrative in the crypto industry over the past decade can be summarized in one sentence: “Give us rules, and we will comply.” But that premise only holds if the rules treat everyone equally.

However, when someone can open a backdoor for their own company, dismantle the agency responsible for enforcement, and prepare to launch using confidential competitor data—how much weight do the words “rules” still carry?

Warren’s deadline for Musk’s reply is April 21. As of the time of publication, Musk has not publicly responded.

And X Money is already live.