Banks Face Setback on Stablecoin Regulations
Banks faced a setback this week when their attempt to impose stricter regulations on rewards for stablecoin transactions fell short, as the proposed Clarity Act did not progress in the Senate. However, JP Morgan achieved a minor success in a distinct area concerning credit card incentives for cryptocurrency purchases.
Loophole in Credit Card Transactions
According to information obtained by Crypto In America, Visa is addressing a loophole related to transactions facilitated by Crossmint, a platform specializing in crypto payment solutions. This loophole had enabled the acquisition of meme coins using Visa credit cards, categorizing these purchases under a merchant code meant for typical digital media items.
An investigative report by The Block uncovered that users utilizing the Robinhood Wallet and the Fomo app made meme coin transactions via credit cards through Apple Pay or Google Pay bypassing the standard Know Your Customer (KYC) verification process.
Classification of Transactions
During these test transactions, which involved both Visa and Mastercard, the purchases were classified under the broader ‘digital goods media’ category—commonly reserved for products like e-books and films—rather than explicit cryptocurrency purchases. Consequently, these transactions allowed customers to accumulate regular credit card rewards, such as points or cash back, which are generally unavailable for crypto-related purchases.
In a statement to The Block, Chase acknowledged that a specific Visa transaction should never have qualified as a cryptocurrency acquisition due to erroneous merchant category coding and subsequently challenged this classification with Visa. The New York Attorney General’s office also confirmed it was looking into the situation.
Crossmint’s Defense and Visa’s Response
In defense of its processing method, Crossmint referenced a 2025 SEC staff statement that identified certain meme coins as collectible items instead of regulated securities. In contrast, Visa appears to have a different stance. An internal communication reviewed by Crypto In America indicated that the usage of the digital goods merchant code for meme coin transactions is inappropriate.
Further actions are underway, as Visa has communicated to payment processors like Checkout.com that this coding will no longer be applicable, providing them a brief transitional period to cease the practice, expected to conclude by next week.
Implications for the Crypto Sector
While meme coin transactions are likely to remain prominent, the associated credit card rewards are on the verge of being eliminated. Moving forward, transactions involving meme coins must be recorded as cryptocurrency purchases, adhering to Visa’s established rules and policies. According to an insider, the implication for the crypto sector is unmistakable: avoid unconventional tactics and ensure the correct coding is applied.
Crypto In America is curated by journalist Eleanor Terrett; for the full article and subscription details, follow the provided link.
