Visa Cracks Down on Memecoin Rewards Loophole

Visa has announced plans to close a loophole in its payment system that allowed users to buy memecoins using credit cards and earn rewards, according to a report from Crypto in America. The move follows an investigation by The Block into Crossmint, the firm powering transactions for popular apps Fomo and Robinhood Wallet.

Crossmint's Token Checkout product had been categorizing memecoin purchases under merchant category code (MCC) 5815, typically intended for digital media purchases like streaming movies or audiobooks. However, payments experts told The Block that the SEC's opinions do not determine how purchases should be categorized under card-network classification rules.

Visa has given payment processors a grace period until next week to adjust their categorization of memecoin purchases before they will need to process them as typical cryptocurrency transactions subject to Visa's restrictions. Crossmint told The Block that it had believed the category was appropriate, citing the SEC's guidance on some memecoins being considered akin to collectibles in a securities context.