NY Lawmakers Aim to Block Elon Musk’s Attempt to turn X into a Venmo, Zelle Competitor

New York could be a stumbling block for billionaire Elon Musk’s attempts to launch a person-to-person payment system on his platform X.

Two state lawmakers from Manhattan sent a letter this week urging the state’s Department of Financial Services not to issue a money-transmitter license to X Corp., which is seeking authorization from all 50 states to launch the X Money payment system.

“What we’re talking about is nothing less than Elon Musk becoming a permanent part of the country’s financial infrastructure — with access to enormous quantities of consumer data, including the data of New Yorkers,” said Assemblymember Micah Lasher, a Democrat from the Upper West Side. “I think it would be grossly irresponsible and contrary to the law.”

X Money is part of Musk’s goal to make X, formerly Twitter, an “everything app” that allows users to conduct financial transactions, receive media and communicate with each other.

Moving into payment processing would make it a rival to services like Venmo, Zelle and Apple Pay. X Corp. announced a partnership with Visa in January to operate its own payment system.

There is no single federal license for money transmission, so X Corp. has been contacting state banking and financial services regulators. It has secured the required approvals from 42 states and the District of Columbia, but not New York.

Lobbyists for the company deferred comment to an official email address, where an inquiry went unreturned. Musk suggested in January that approvals from New York and California were the most onerous. X Money secured a California license in September.

Lasher and state Sen. Brad Hoylman-Sigal, a Democrat from Manhattan’s West Side, sent a letter Monday calling for the financial services department to reject X Corp.’s application.

State law says the agency should consider a money transmitter applicant’s “financial condition and responsibility, financial and business experience, character and general fitness” and issue a license if it believes the applicant will do business “honestly, fairly, equitably, carefully and efficiently … and in a manner commanding the confidence and trust of the community.”

The Democratic lawmakers argued Musk has “engaged in a pattern of reckless conduct, in both business and government, that has put consumers at risk and demonstrated a lack of character and general fitness.” They pointed to his work with the Department of Government Efficiency, a Trump administration initiative to lay off workers and shutter federal agencies in the name of reducing costs.

A spokesperson for the financial services department didn’t comment on whether the agency is weighing an application from X Corp. The department “thoroughly reviews all license applications and holds all applicants to identical, robust standards,” spokesperson Ciara Marangas said.

Musk’s alliance with President Donald Trump has drawn scrutiny from New York officials on several fronts. Several lawmakers including Lasher called on the state’s Empire State Development agency to pump the brakes on renegotiating a lease with Tesla for a state-controlled factory in Buffalo.

State Sen. Patricia Fahy, a Democrat from Albany, introduced legislation that would force Tesla to close its dealerships in the state.

Story by Jimmy Vielkind/New York Public News Network

Jimmy Vielkind covers how state government and politics affect people throughout New York. He has covered Albany since 2008, most recently as a reporter for The Wall Street Journal.

Image Credit: Trevor Cokley/U.S. Air Force