Visa is moving to close a loophole in checkouts powered by Crossmint that allowed meme coin purchases made with credit cards to be processed under a merchant code meant for digital media. This action follows an investigation by The Block, which found that users of Robinhood Wallet and Fomo apps could buy meme coins via Apple Pay or Google Pay without separate KYC processes. These transactions were coded as "digital goods media," a category typically used for e-books and music, enabling customers to earn standard credit card rewards like points or cash back.
The regulatory pressure intensified after Chase challenged the classification, stating that one Visa transaction was misclassified and should not have earned rewards. The New York Attorney General’s office also confirmed it is reviewing the matter. While Crossmint defended its approach by citing a 2025 SEC staff statement describing certain meme coins as collectibles rather than securities, Visa determined the digital goods media code is inappropriate for these transactions. Payment processors, including Checkout.com, have been informed that the code will no longer be accepted, with a grace period expected to end next week. Meme coin purchases will continue but must now be coded as crypto transactions, subject to Visa's specific rules and restrictions.
This development signals a tightening of payment network compliance regarding cryptocurrency classifications, effectively ending the arbitrage where high-risk assets were treated as low-risk digital goods to secure consumer rewards. By enforcing accurate merchant category codes, Visa aligns its infrastructure with regulatory expectations and bank risk models, removing the incentive structure that previously encouraged casual retail speculation through credit instruments. The involvement of major financial institutions like Chase and state regulators underscores that payment networks are increasingly acting as gatekeepers for crypto market integrity, prioritizing clear categorization over ambiguous technical workarounds.
For the broader industry, this shift highlights the fragility of relying on legacy payment infrastructures for novel asset classes. Processors and wallets must now invest in robust compliance frameworks that accurately distinguish between securities, commodities, and collectibles to avoid future penalties or service disruptions. The closure of this loophole may reduce immediate retail volume for meme coins due to the loss of reward incentives, potentially pushing speculative activity toward platforms with different fee structures or direct crypto rails. Stakeholders should monitor whether other payment networks adopt similar strict coding standards, which could further fragment the accessibility of crypto assets for mainstream consumers.
