Meme Coin Credit Card Purchases Under Scrutiny in New York State
The New York State Attorney General's Office has launched an investigation into the practice of allowing credit card purchases of meme coins on certain apps, including Fomo and Robinhood's self-custody wallet. The issue at hand is that these transactions are being processed under the 'digital content' category (MCC 5815), rather than as cryptocurrency purchases, which allows users to earn points, miles, and other rewards.
JPMorgan Chase has requested that Visa look into the matter, noting that the transactions in question were not recognized as cryptocurrency and that the code assignment may have been incorrect. Crossmint, the company behind Token Checkout, claims that the classification is appropriate, citing the SEC's position that certain meme coins may be viewed as collectibles.
The issue has raised questions about the validity of processing cryptocurrency purchases under a different category than standard retail transactions. If found to be in violation of regulations, the impact could extend beyond Crossmint to other card companies and merchant acquirers that approved the payments.