Mizuho: Elon's X Money Could Rival PayPal but Faces CLARITY Act Obstacles

Japanese bank Mizuho just put out a note warning that Elon Musk’s X Money payments project is shaping up to be a real threat to PayPal. They downgraded PayPal’s stock to neutral because X’s planned “everything app” could pull users away with built-in P2P transfers, digital wallets, and checkout features that work right inside the X platform. X already has over 400 million monthly users, and they recently rolled out Cashtags so people can track stocks and crypto prices without leaving the app.

Mizuho points out that X Money wants to offer up to 6% yield on balances, which sounds a lot like the kind of product regulators are watching closely. The CLARITY Act, which is still being worked out, could stop non-banks from offering anything that looks like unregulated deposits or stablecoin-style features. That one regulatory hurdle might force X to scale back or delay some of the more interesting parts of the plan.

This is all happening at the same time SpaceX, another Musk company... has confidentially filed for its IPO. A handful of crypto platforms like Bitget have already started offering preSPAX tokens that track SpaceX’s expected post-IPO performance, giving people a way to get exposure through crypto before the actual shares hit the market.

It’s a pretty clear example of how big non-bank players are trying to blend social media, payments, and finance, but regulators are drawing lines around what yield-bearing products non-banks can actually offer.

What do you think... will X Money still manage to compete with PayPal and Venmo even if the yield feature gets cut, or is the CLARITY Act going to slow the whole thing down?