Robinhood and Fomo Face Regulatory Heat Over Meme Coin Payment Loophole

Financial institutions and regulators are scrutinizing Robinhood and Fomo for allegedly allowing users to purchase meme coins using credit cards without proper Know Your Customer (KYC) verification.

Users of Robinhood Wallet and social trading app Fomo discovered they could buy meme coins, including dogwifhat (WIF), using Visa and Mastercard credit cards, Apple Pay, or Google Pay without completing any separate KYC identity verification.

The transactions were processed under Merchant Category Code 5815, which covers digital goods and media, rather than the standard crypto categories. This misclassification allowed users to earn credit card rewards on their purchases.

Chase has filed a case inquiry with Visa, asking them to investigate the matter, while the New York State Attorney General's Office is also reviewing the payment structure.