Mizuho Bank: Elon Musk’s X Money may disrupt the US payments market and impact PayPal

BlockBeats news, April 16, according to The Block, analysts at Mizuho Bank released a report on Thursday stating that the X platform under Musk, with its new financial service X Money, has the potential to disrupt the US payments industry, but its cryptocurrency integration plans may be hampered by regulation. Mizuho analysts Dan Dolev and Andrew Jenkins wrote in a client report that X Money is positioned as the financial infrastructure layer of the X platform, aiming to integrate instant messaging, bank deposits, and commercial transaction features, similar to the “super app” models of WeChat Pay or Alipay. With the X platform’s monthly active user base of 500 to 600 million and Musk’s background as a co-founder of an exchange in the payments industry, “X Money has the potential to disrupt the US payments industry.”

On the regulatory front, analysts pointed to two main obstacles: first, New York State’s recently proposed “CRYPTO Act” (Cryptocurrency Regulation, Protection, Trust, and Oversight Act), which would criminalize unlicensed virtual currency activities in the state, raising the compliance bar for X’s future crypto integration plans; second, the “Clarity Act” may restrict non-bank financial platforms from offering yield to users, potentially blocking X Money’s planned 6% annualized yield on cash balances for users. Analysts described the timing of launching such a yield product as “particularly sensitive.”

Mizuho also downgraded a certain exchange (PYPL) stock rating to “Neutral”, pointing out that the exchange and its Venmo app “face the most direct substitution risk, as X is targeting the same peer-to-peer transfer and digital wallet entry points.” This week, the X platform also launched a new “Cashtags” feature, allowing users to view financial data for stocks and cryptocurrencies directly on the timeline.