Credit-card memecoin buys on Fomo and Robinhood Wallet appear to sidestep card rules

Fomo and Robinhood Wallet users can buy selected memecoins with credit cards through Apple Pay or Google Pay without completing KYC forms. Crossmint powers the purchases through its Token Checkout product. Test purchases of WIF on Visa and Mastercard delivered the tokens to the apps' wallets. The test purchases also earned ordinary card rewards. The transactions used merchant category code 5815, which covers digital goods such as electronic books, movies, artwork and music. The setup appears to sidestep card-network crypto rules. Visa identifies MCC 6012 as a category for direct cryptocurrency purchases. Visa also identifies MCC 6051 as a category for direct cryptocurrency purchases. Mastercard requires direct cryptocurrency purchases to use MCC 6051 and a cryptocurrency transaction identifier. Chase said it believed the MCC 5815 classification was incorrect. Chase said it was opening a case with Visa. Chase also said cryptocurrency purchases are not eligible for rewards under its program terms. Crossmint said the classification was reviewed with relevant partners and was appropriate for eligible digital collectibles. Crossmint cited SEC guidance that some memecoins can be viewed as collectibles. The SEC and CFTC guidance released in March names WIF as an example of a digital collectible. Payments experts said the SEC's treatment of memecoins does not determine card-network rules. Professor Yesha Yadav said the SEC and card networks operate under separate regimes. Fomo's Token Checkout supported about 150 tokens during the review. Crossmint said eligible memecoins represented about 80% of memecoin trading volume in the previous 24 hours. Crossmint said it supports secondary sales of eligible memecoins but prohibits primary sales and investment-style tokens. DEGEN and GENIUS were later removed from Apple Pay and Google Pay purchases on Fomo and Robinhood Wallet. Fomo said Crossmint accounted for about 7% of user inflows. Crossmint said more than 68,000 first-time crypto buyers had used Apple Pay checkout in Fomo as of April. Fomo raised a $75 million Series B round in June. The round valued Fomo at $550 million. Crossmint said Fomo's weekly active traders increased 7x after the integration launched. Robinhood Wallet launched its Crossmint integration last month. Checkout.com was identified as the acquirer for the Visa test transaction. Checkout.com said its merchants must follow card-network rules, KYC and anti-money-laundering obligations, and merchant category code requirements. Crossmint said it is securing money transmission licenses across the United States and licenses in the UK and Canada.