Author: Ada, Shenchao TechFlow

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

They belong to DOGE, the "Department of Government Efficiency" led by Elon Musk. Their destination is the CFPB (Consumer Financial Protection Bureau) headquarters. This agency is 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 obtained "read-only" access. But late Friday night, Russell Vought, director of the Office of Management and Budget, sent an email requesting broader data access for DOGE. 90 minutes later, Vought was appointed as the acting director of the CFPB.

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

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

Nine days. From the announcement of participation to dismantling the judges, it took only nine days.

Compliance Marathon and Nine-Day Blitzkrieg

In 2013, Coinbase registered as a money services provider with FinCEN, becoming one of the first crypto companies to actively embrace federal regulation. That year, Bitcoin was still under $200, and the entire industry's market value was not enough to buy an apartment in Manhattan.

The next decade was a compliance marathon. Coinbase obtained money transfer licenses in 49 states and territories, with margin requirements ranging from $1,000 to $500,000 and net asset 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 revolved around three core pillars: regulatory registration, operational transparency, and proactive engagement with financial regulators, covering over 100 countries.

But lawsuits came nonetheless. In 2023, the SEC sued Coinbase on the grounds of "operating an unregistered securities exchange." The company was forced into a protracted legal battle. The Third Circuit Court of Appeals ruled that the SEC "did not adequately explain why it refused to promulgate rules," which was considered a partial victory. But what ultimately led to the dismissal of the lawsuit was the 2024 U.S. election. Coinbase and the crypto industry’s super PAC spent over $130 million to support campaigns, with Coinbase alone contributing $75 million. In February 2025, newly appointed SEC acting chair Mark Uyeda dropped the lawsuit against Coinbase unconditionally, without any fines, and prohibited re-litigation on the same grounds.

Ten years of compliance, a lawsuit, and $75 million in political donations. This is the price Coinbase paid to obtain the phrase "legitimate operation."

PayPal took another route, but it was equally expensive. In August 2023, PayPal launched the stablecoin PYUSD, issued by Paxos Trust Company regulated by the New York State Department of Financial Services. The GENIUS Act (U.S. Stablecoin Regulatory Act) required 100% reserve backing and monthly public attestations, which PYUSD fully complied with. Moreover, any expansion to a new blockchain (from Ethereum to Solana to Stellar) required NYDFS regulatory approval. In December 2025, PayPal claimed that PYUSD was "the largest dollar stablecoin approved at the federal level."

Rules are set this way. To enter the U.S. financial market, one must acquire licenses state by state, and clear regulatory hurdles one agency at a time. Coinbase took ten years, and PayPal spent hundreds of millions on compliance infrastructure.

X Payments LLC also obtained licenses. As of May 2025, it had secured money transfer licenses in 40 states. Formally, everything is compliant.

But the gap between formal compliance and substantive regulation is not trivial.

On November 21, 2024, the CFPB finalized a rule imposing federal regulations on large digital payment applications handling over 50 million transactions, in the same manner as traditional credit cards and bank accounts. This rule directly affected X Money. Six days later, Musk tweeted: "Delete CFPB."

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

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

The Hidden Cards in the Judges' Hands

Dismantling a regulatory agency is already outrageous. But the story has even more outrageous parts.

The CFPB is not a "guardian"; it has data.

In 2021, to evaluate the consumer protection risks of payment technologies, the CFPB issued mandatory data requests to Amazon, Apple, Facebook, Google, PayPal, and Square (now Block). These companies submitted a large amount of confidential business information, including product strategies, internal operational data, and compliance records. In the following years, the CFPB initiated investigations or enforcement actions against several of these companies, including PayPal and Cash App.

This data is still in the CFPB's database.

And the DOGE team gained access to "all non-confidential databases,” including sensitive bank review records and enforcement records. According to Bloomberg, DOGE employees began accessing the system on the same day they entered the CFPB headquarters, before completing the required training on privacy, cybersecurity, and ethics.

Seth Frotman, former chief legal officer of the CFPB, testified before Congress: "They gained not only information about consumers, but also information about competitors."

Former CFPB chief technology officer Erie Meyer recalled that five young DOGE team members wandered around the secure executive suite, trying to access locked offices. She resigned the next day.

Think about what this means. A new player about to enter the payment market obtained all major competitors’ health reports before even opening. Product strategies, operational weaknesses, regulatory issues, undisclosed enforcement information.

Congresswoman Maxine Waters was more straightforward at the hearing: "In addition to obtaining consumer data from millions of Americans, Musk can now also illegally steal sensitive business information from other U.S. companies in the same industry."

Legal scholar Tim Wu characterized this data access as "god-tier," believing it posed "a huge competitive advantage" to companies in the same competitive field.

What would happen if the founder of a crypto exchange did the same thing? The SEC would file a case, the FBI would show up, and the CEO would go to jail. This is not a hypothetical; FTX's Sam Bankman-Fried was sentenced to 25 years for misappropriating customer funds.

The difference is: SBF committed crimes under the rules, while Musk operated above the rules.

The Backdoor of the GENIUS Act

If dismantling the CFPB is "breaking," then the GENIUS Act is "establishing." However, this "establishing" created a backdoor.

The GENIUS Act is the U.S. stablecoin regulatory bill signed by Trump, which establishes the basic framework for stablecoin issuance, including reserve requirements, information disclosure, and delineation of regulatory jurisdiction.

But the problem lies in one clause.

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

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

In other words: a person about to issue a stablecoin was sitting in the position of rule-makers while a favorable exemption clause was written into the stablecoin bill.

Compare this to PayPal's PYUSD. Issued by Paxos and comprehensively regulated by the New York Department of Financial Services, it requires 100% reserve backing and monthly third-party audit attestations, with approval required for each blockchain expansion. But the draft of the CLARITY Act considers prohibiting the "earning of returns from holding payment stablecoins," directly targeting PYUSD's 4% reward program.

And what about X Money? It claims a 6% APY on deposits, with Cross River Bank, which has previously been penalized by the FDIC, as its partner. Warren questioned in her letter: "In an environment where federal funds rates are 3.5%-3.75%, what exactly are X Money and Cross River relying on to pay the 6% yield? High-risk investments, intrusive data monetization, or gimmicks?"

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

PayPal spent two years complying with the GENIUS Act, providing attestations every month and obtaining approvals for each blockchain. X Money secured a dedicated green channel 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, in partnership with Visa, offering 6% APY, without federal regulation from the CFPB.

In the same month, Coinbase had just obtained conditional approval from the OCC, preparing to establish Coinbase National Trust Company. From registering with FinCEN in 2013 to obtaining national trust company approval in 2026, a full thirteen years.

Still in April, the probability of the CLARITY Act passing in the Senate was 50-50.

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

But when someone can open a backdoor for their own company while dismantling the agency responsible for enforcement, and gathering confidential data from competitors to prepare for launch, how much weight do the words "rules" still carry?

Warren's deadline for her response to Musk is April 21. As of this writing, Musk has not publicly responded.

And X Money has already launched.