Visa Closes Crossmint Memecoin MCC Loophole: What Firms Must Know

Visa is moving to shut down a merchant category code workaround that allowed memecoin purchases to be processed as ordinary digital media transactions, earning cardholders standard rewards points and cash back in the process. The decision follows a reported investigation into Crossmint, the payments infrastructure firm powering credit-card memecoin checkouts on the apps Fomo and Robinhood Wallet, and its payment processor Checkout.com. For accounting firms, CFOs, and compliance teams, the episode surfaces real questions about how digital asset transactions are categorised, reported, and ultimately recognised on the books.

How the Loophole Worked

At the centre of this story is Merchant Category Code 5815, a classification normally reserved for digital media purchases such as streaming subscriptions, e-books, and audiobooks. Crossmint routed memecoin purchases through MCC 5815, meaning card networks and issuing banks saw the transactions as routine digital content spend rather than cryptocurrency acquisitions.

The MCC 5815 Classification Problem

Because the transactions carried no special crypto flags, cardholders could use standard credit cards to buy memecoins and still accumulate rewards. Issuing banks applying their normal digital-content policies had no automated signal to treat the purchases differently. JPMorgan Chase reportedly told Visa directly that it considered the category inappropriate for memecoin transactions and referred the matter to the network for review.

Crossmint's justification, according to reporting by The Block, was that the US Securities and Exchange Commission had indicated some memecoins could be treated as analogous to collectibles in a securities context. Payments experts interviewed for the same investigation pushed back on that reasoning, noting that SEC characterisations of an asset class do not govern how card networks classify merchant transactions. Those are separate rule sets operated by Visa and Mastercard independently of securities law.

Tokens Beyond Memecoins

The investigation also highlighted that not every token offered through Crossmint's Token Checkout product was a memecoin in any conventional sense. One example cited is GENIUS, the native token of a non-custodial trading platform with no apparent origin as an internet meme or cultural reference. Another token, DEGEN, was also flagged. Both were reportedly removed from Crossmint's Apple Pay checkout flow after questions were raised about their classification. That detail matters for accounting and compliance purposes: if a firm's control environment allows tokens of varying regulatory character to be purchased under a single, opaque category code, the downstream classification risk is compounded.

Visa's Response and the Grace Period

According to the newsletter Crypto in America, which broke the follow-on story citing a source familiar with the matter and correspondence it reviewed, Visa has instructed processors to stop using MCC 5815 for memecoin purchases. A grace period is in place, expected to expire around the last week of September 2026. After that window closes, such purchases would need to be processed under codes appropriate for cryptocurrency transactions, which carry different network rules and, crucially, different issuer restrictions.

What Happens After the Grace Period

Visa's existing rules for cryptocurrency purchases typically require explicit disclosure at the point of sale and may restrict or prohibit rewards earning entirely, depending on the issuing bank's programme terms. Once MCC 5815 is no longer available as a routing option, processors and platforms offering credit-card crypto purchases will need to use a compliant code. That reclassification has knock-on effects: some issuers block crypto purchases outright, others charge cash-advance fees rather than purchase fees, and rewards programmes almost universally exclude the asset class. The practical outcome for end users is that buying memecoins on credit cards becomes materially more expensive and less attractive.

Crossmint's public position, as communicated to The Block, is that its standing with Visa, Mastercard, and other card network partners remains intact, and that its processing procedures for digital goods have not changed. The spokesperson added that if network guidance is updated, Crossmint's procedures will be updated accordingly. As of the time of the original report, memecoin purchases remained live on both Fomo and Robinhood Wallet.

Regulatory and Legal Attention

Beyond Visa's internal enforcement, the New York Attorney General's office confirmed to The Block that it was aware of Crossmint's product and was looking into the matter. That signals potential consumer-protection or financial-fraud scrutiny at the state level, separate from any card-network enforcement action. Crossmint itself has described its status as that of a regulated financial entity, with one of its strategy leads acknowledging tension between commercial activity and legal compliance in an interview with The Block.

Mastercard's Position

Mastercard has not publicly disclosed whether it plans to issue equivalent instructions to processors. Its silence leaves open the question of whether a parallel routing option remains available via Mastercard-network transactions, at least temporarily. Checkout.com did not respond to requests for comment at the time of publication.

Accounting and Tax Implications for Firms and CFOs

The Crossmint episode is not just a payments curiosity. It has concrete implications for how digital asset transactions flow through a firm's general ledger and how they are reported at year end.

Transaction Classification and the General Ledger

Under US GAAP, digital assets that do not meet the definition of cash equivalents or financial instruments are typically recorded as indefinite-lived intangible assets (or, under the updated ASC 350-60 framework, at fair value if the entity elects to do so). The MCC code attached to a transaction does not change the asset's accounting treatment, but it does affect how the purchase appears in bank and card feeds. If credit card statements show memecoin purchases coded as "digital media," automated reconciliation tools will miscategorise the outflow unless rules are built specifically to catch and reclassify it. Firms ingesting card data into their digital asset accounting software need to audit whether those rule sets are current.

The risk is compounded where a firm is paying on behalf of clients or employees. An expense report carrying a digital media charge for what is actually a speculative token acquisition creates a misstatement in operating expenses. In an audit context, that is a control deficiency at minimum and could support a finding of inadequate segregation or oversight if it is systemic.

Tax Treatment of Rewards Earned on Crypto Purchases

One angle that has received less attention is the rewards earned while the loophole was open. Credit card cash-back and points rewards earned on ordinary purchases are generally not treated as taxable income under IRS guidance, on the basis that they represent a rebate on spending. However, the IRS has not issued definitive guidance on rewards earned specifically on cryptocurrency purchases. If a regulator or court ever takes the position that such rewards constitute income from a crypto-adjacent transaction rather than a purchase rebate, the tax treatment could differ. Firms and advisers carrying open positions on reward-point income should flag this ambiguity now, particularly where the underlying purchases are being re-examined by card networks.

Implications for Crypto Bookkeeping and Audit Trails

Good crypto bookkeeping software should be able to receive raw transaction data and apply classification logic based on transaction type, not solely on the MCC code provided by the card network. The Crossmint situation illustrates why relying on card-network categorisation as the primary classification input is insufficient for digital asset purchases. Firms should ensure their digital asset accounting software applies a secondary classification layer, cross-referencing wallet activity, blockchain data, or asset type before posting to the ledger. Where that layer is absent, the books may carry misclassified transactions that survive routine reconciliation but fail under deeper audit scrutiny.

What Compliance Teams Should Do Now

The immediate priority for compliance and finance teams is a targeted review of any credit card transactions coded under MCC 5815 that involved digital asset acquisitions. That review should cover the period during which Crossmint's Token Checkout was active. The checklist below outlines the key steps:

Practical Review Checklist

• Pull card-feed data and filter for MCC 5815 transactions since the Token Checkout product launched. Cross-reference against on-chain wallet activity to identify any digital asset acquisitions miscoded as digital media.
• Reclassify any identified transactions in the general ledger and assess the impact on expense, intangible asset, or investment line items.
• Review whether any rewards points or cash back earned on those transactions have been treated as a cost reduction or income item, and consider whether a reassessment is appropriate.
• Update classification rules in your digital asset accounting or crypto bookkeeping software to flag MCC 5815 transactions for manual review pending reclassification.
• Assess client or employee expense policies: if your firm processes reimbursements, confirm that digital asset purchases cannot be submitted under digital media expense codes.
• Monitor Mastercard's response. If Mastercard does not follow Visa's lead, a parallel routing risk remains and deserves its own control.
• Watch the New York AG's inquiry. If enforcement action follows, it could produce guidance or settlements relevant to consumer-facing crypto payment products more broadly.

Frequently Asked Questions

What is MCC 5815 and why does it matter for crypto purchases?

MCC 5815 is a merchant category code assigned by card networks to digital media purchases such as streaming services and e-books. When memecoin purchases were routed through this code, card issuers treated them as routine digital content spend, which allowed rewards to accrue and bypassed crypto-specific restrictions. Visa's move to prohibit this routing for memecoin transactions closes that gap.

Does Visa's action affect how firms must account for past memecoin purchases on credit cards?

Visa's enforcement action is prospective, applying to future transactions once the grace period expires. However, past transactions coded under MCC 5815 may already be misclassified in a firm's general ledger if the crypto bookkeeping software relied on the card-network code rather than the underlying asset type. A retrospective review is advisable to correct any mispostings before the next audit cycle.

Are the rewards earned on these purchases taxable?

The IRS has not issued specific guidance on rewards earned from credit card purchases of digital assets. General IRS practice treats card rewards as non-taxable purchase rebates, but that position has not been tested against rewards earned specifically on crypto acquisitions. Given the regulatory attention this practice is now attracting, firms and advisers should flag the uncertainty rather than assume the standard rebate treatment applies without qualification.

What is Mastercard's position?

As of the date of this report, Mastercard has not publicly disclosed whether it will issue equivalent instructions to processors. That leaves open the possibility that Mastercard-network routing could remain available for memecoin purchases, at least in the short term. Firms should monitor Mastercard's response and update controls accordingly.

What should firms using digital asset accounting software do right now?

The priority is to verify that your classification logic does not rely solely on MCC codes from card feeds. Introduce a secondary layer that cross-references asset type or blockchain activity. Then conduct a targeted pull of MCC 5815 transactions from the period the Token Checkout product was live, assess whether any are digital asset acquisitions, and reclassify as needed. Document the review for audit purposes.

Source: The Block