NYDFS tells X Money to halt interest payments to New Yorkers

This week, the New York Department of Financial Services (NYDFS) informed Elon Musk’s X Money that it cannot continue to pay bank account-like interest on non-bank account deposits of New York residents. To avoid capital flight from the country’s wealthiest metropolis, X Money offered New York residents a $300 “direct deposit bonus” as “interim compensation,” which it repeatedly insisted “does not constitute APY or interest.”

X Money does not offer bank accounts in New York. Instead, according to its site, it is a product for New York customers to “earn yield,” “get cashback,” “send wires,” “mail checks,” and “pay your bills,” with “free ATM withdrawals” while “protected with FDIC coverage.” It holds New Yorkers’ money in a product called a “stored value account” that allows customers to “obtain interest” through September 30 then “earn a $300 bonus” after October 1.

NYDFS approved X Payments as a money transmitter — not a bank — effective July 23. X Money lists its non-bank license number MT-105532 and admits on that page, “X Payments LLC is not a bank.” Its stored value account terms disclaim, “X Payments is not a bank, is not FDIC-insured, and does not take deposits,” even though the X Money homepage mentions deposits 16 times. Despite the legal throat-clearing, X Money promises to credit the $300 bonus within 14 days of New York residents’ $3,000 of qualifying deposits, even though it insists a stored value account is not a bank account.

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