Buying memecoins with credit cards on Robinhood Wallet and Fomo appears to sidestep card-network crypto rules

Memecoin purchases made with credit cards inside Robinhood Wallet and the social trading app Fomo sidestep the payment-coding rules that Visa and Mastercard apply to cryptocurrency, according to reporting and test transactions by The Block on both card networks.

The purchases, including the memecoin dogwifhat (WIF), ran through Apple Pay and Google Pay, earned ordinary card rewards and required no know-your-customer checks. They are powered by Token Checkout, a product from crypto infrastructure firm Crossmint. Its head of strategy, Fonz Olvera, said the company believed it was alone in offering a no-KYC product of this kind, describing the embedding of checkout into mobile apps and the orchestration of Apple and Google payments as part of its "secret sauce."

The transactions were coded under merchant category code 5815, which covers books, films, digital artwork and music delivered electronically. Visa's standards manual requires direct crypto purchases to use MCC 6012 or 6051 with special crypto flags, while Mastercard requires MCC 6051 plus a crypto transaction identifier. Chase told The Block it believed the 5815 designation was incorrect and said it was opening a case with Visa, noting the Visa transaction also lacked crypto flags. The office of New York Attorney General Letitia James said it is aware of and reviewing the matter.

Crossmint counters that memecoins are digital collectibles rather than currency, pointing to SEC commentary and joint SEC-CFTC guidance issued in March that names WIF as an example of a digital collectible. Some payments specialists are unconvinced. Yesha Yadav, an associate dean at Vanderbilt Law School, said SEC guidance is not dispositive for card network rules and called the two "very separate regimes," adding that "collectible" is not a legal category. Ashley Ebersole, chief legal officer at tokenisation firm tx, said digital commodities and digital collectibles would likely face similar treatment if regulators focused on them.

Fomo, which raised a $75 million Series B at a $550 million valuation in June and integrated Crossmint in June last year, saw weekly active traders rise sevenfold after launch; more than 68,000 first-time crypto buyers had used the Apple Pay flow on the app as of April. Robinhood Wallet's integration went live last month. Fomo CEO Se Yong Park said buying a memecoin is no different from buying a morning coffee, though the company said Crossmint accounts for roughly 7% of user inflows. Robinhood Crypto's Johann Kerbrat referred questions to Crossmint.

Chase identified Checkout.com as the acquirer for the test Visa transaction. Checkout.com said its US acquiring set-up uses sponsor banks Cross River Bank and Pathward; Pathward confirmed it was not involved in the test purchases, while Cross River did not respond to requests for comment. Crossmint says it is pursuing money transmission licences in the US, UK and Canada. After The Block asked how the GENIUS and DEGEN tokens were categorised, both became unavailable for Apple Pay or Google Pay purchase on Fomo and Robinhood Wallet.