Meme coin purchases via Robinhood, Fomo skip crypto card rules
Regulation & Gov ·
An investigation found that credit card purchases of meme coins on two platforms are being coded as ordinary retail spending, prompting scrutiny from a major bank and New York's top prosecutor.
Users of Robinhood Wallet and the social trading app Fomo have been able to buy meme coins, including WIF, through a payment processor called Crossmint using Visa, Mastercard, Apple Pay, and Google Pay, without going through a separate identity verification step, according to reporting from The Block. The outlet's own test purchases showed the payments were tagged under a "digital goods/media" category instead of the crypto designation that card networks normally require for such transactions.
That mislabeling matters because crypto purchases are typically excluded from card reward programs, while goods and media purchases are not. By routing meme coin buys through the wrong category, cardholders on these platforms have reportedly kept earning ordinary points and cash back on transactions that would otherwise be treated differently under network rules meant to flag crypto activity.
Chase, the banking arm of JPMorgan, told The Block it views the coding of these Visa transactions as incorrect and believes they should not be eligible for card rewards, and it has formally asked Visa to look into the practice, per the report shared via wublockchain.xyz. Separately, the New York Attorney General's Office confirmed it is examining the same issue.
The arrangement also raises questions about identity checks: because the purchases bypass the standard crypto transaction pathway, users appear able to acquire meme coins without completing the KYC steps normally tied to that classification. It is not yet clear how many users have transacted this way, how much reward value has been generated as a result, or whether Robinhood Wallet, Fomo, or Crossmint have responded to the findings.
What remains unresolved is whether Visa will alter the transaction coding following Chase's request, whether the New York Attorney General's review will lead to any formal action, and whether other card issuers or networks will conduct similar audits of how meme coin purchases are classified across other platforms.