Visa is directing payment processors to stop coding memecoin purchases as digital-media transactions, closing a loophole that let credit card holders earn ordinary points and cash back on the buys. The move follows The Block's investigation into Crossmint, the firm behind memecoin checkout on Fomo and Robinhood Wallet, and a grace period for compliance is expected to end next week.
Visa is telling payment processors to stop classifying memecoin purchases under merchant category code 5815, a code reserved for digital goods and media, according to a Friday report from the newsletter Crypto in America. The code lacked special flags marking the transactions as crypto-related, so cardholders who bought memecoins earned rewards that Visa's rules otherwise exclude for crypto purchases. The change follows The Block's earlier investigation into Crossmint, the firm powering these purchases on the apps Fomo and Robinhood Wallet, whose payment processor Checkout.com was told directly that the digital-media category no longer applies to memecoin buys.
The loophole's permissive terms
Crossmint's checkout let users spend up to $1,000 a day on memecoin purchases without any Know Your Customer verification, with total volume capped at $1 million. As those transactions shift to crypto-specific rules, stricter KYC checks could follow. Chase was the first to flag the coding anomaly to Visa, and Visa confirmed that at least one transaction had been incorrectly categorized before working with processors, including Checkout.com, to mandate the reclassification.
The checkout was still live on both apps as of publication, though Visa's grace period is expected to end next week. After that, the purchases must be processed as ordinary cryptocurrency transactions subject to Visa's standard restrictions.
Crossmint defends its classification
Crossmint told The Block it believed the digital-media category was appropriate given SEC guidance that some memecoins can be considered akin to collectibles in a securities context, though payments experts said the SEC's opinions do not typically determine card-network classification. Crossmint Head of Strategy Fonz Olvera told The Block that complying with regulation is important, but the company is "always going to have a little bit of tension between the business and the law".
Some tokens sold through Crossmint's checkout, such as Genius Terminal's GENIUS, appeared to stretch the definition of "memecoin," having no apparent origin as an internet meme or cultural trend. GENIUS and another token, DEGEN, were made unavailable through Crossmint's Apple Pay checkout after The Block asked about their classification.
New York Attorney General Letitia James' office said it was aware of Crossmint's product and looking into the matter. Mastercard, meanwhile, has not disclosed whether it will issue similar instructions to its own payment processors.
Sources: The Block, Crypto Briefing
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