[DigitalToday reporter Jinju Hong (홍진주)] X Money, a payments service launched by Elon Musk's X, will no longer be able to pay interest on stored balances in New York. That is because New York financial authorities notified X Money to cut the yield on New York customer accounts to 0.00 percent from Oct. 1.

Cryptopolitan, a blockchain outlet, reported on Sept. 1 local time that the New York Department of Financial Services (NYDFS) said X Money's New York account yield will be applied at 0.00 percent from Oct. 1.

The move means the yield on stored balances that X Money presented as a key benefit in its U.S. rollout will disappear in New York. When it launched across the United States, X Money sought to differentiate itself by offering a yield on users' stored balances.

X said at launch it would provide a 6 percent annual yield for Premium Plus subscribers. It was designed so that regular Premium subscribers could also receive the same level of benefits if they meet certain deposit requirements or transfer their salary.

In New York, it has become difficult to offer such yield benefits. The main reason is a licensing issue for X Money's money services. X Payments, X's money services subsidiary, secured money transmitter licenses in 41 states and Washington, D.C. by the time of X Money's nationwide U.S. launch. But New York and Massachusetts were not included among the jurisdictions where licenses were secured.

As a result, even though X Money promoted a nationwide U.S. launch, actual terms of use varied depending on licensing status by state. New York users can use X Money, but will not be able to receive interest benefits on stored balances.

X Money was launched on Aug. 31 for Premium and Premium Plus subscribers who have U.S. accounts. About 4,400,000 Premium subscribers are potential users.

Even before the launch, New York still had unresolved licensing issues. NYDFS was reported to have remained undecided in July on whether to approve X's money transmitter license.

The service's competitiveness is also expected to be affected. Along with yields on stored balances, X Money promoted key features including a metal Visa debit card linked to a user's account, fee-free person-to-person transfers, and support for Apple Pay and Google Pay.

The 6 percent annual yield was one of the key incentives to attract users. But with that benefit excluded for New York users, it has become difficult for them to use the service on the same terms as users in other regions.

The New York authorities' decision also ties into earlier concerns raised by politicians. New York State Senator Brad Hoylman-Sigal and Assemblymember Micah Lasher sent a letter to NYDFS in May last year urging it not to issue a money transmitter license to X. They cited concerns including Musk's actions related to the Department of Government Efficiency (DOGE) and X's management of consumer data.

New York is seen as a region with strict regulations on finance and digital assets. Financial institutions and crypto companies often use New York's regulatory standards as a key reference point. Stablecoin issuer Circle received a limited purpose trust charter from NYDFS in July. At the time, Circle CEO Jeremy Allaire called New York financial authorities an "international standard-setter for digital asset regulation."

Moves to tighten New York's digital asset regulations are continuing. In June, NYDFS proposed new stablecoin rules aligned with the U.S. federal GENIUS Act while maintaining existing consumer protections. The rules included requirements such as full reserve backing and independent audits.

That means whether X Money expands further is expected to hinge on whether it can obtain approvals in places where it has not secured licenses, including New York and Massachusetts. Since it has promoted yield on stored balances as a key marketing element, if the licensing gap drags on, the issue of varying terms of use by region could become more prominent.

As X Money enters the U.S. financial services market in earnest, how well it can pass through New York's strict regulatory environment is emerging as a key variable for future service expansion.

will stop paying interest on New York customers’ Money balances starting October 1, 2026 and the APY for those customers will drop to 0.00%. The New York Department of Financial Services informed that it is currently not permitted to pay interest on stored-value… pic.twitter.com/jrrLZvu65Y