A payment feature available through Robinhood Wallet and social crypto trading app Fomo is drawing scrutiny after users were found to be able to purchase certain memecoins directly with credit cards through Apple Pay or Google Pay without completing a separate identity-verification process typically associated with buying cryptocurrency.
At the center of the issue is Crossmint, a crypto infrastructure company whose Token Checkout product allows users to buy selected memecoins in a process designed to resemble a conventional online purchase rather than a traditional cryptocurrency on-ramp.
The distinction matters because cryptocurrency purchases are normally subject to specific payment-network classifications, processing requirements and restrictions on credit card rewards.
Testing of the feature found that purchases of dogwifhat, or WIF, made with Visa and Mastercard credit cards were instead classified under a merchant category generally used for digital media such as electronically delivered books, movies, music and digital artwork.
That classification allowed the transactions to pass through the card networks like ordinary purchases and, in the tests, resulted in standard credit card rewards being earned.
JPMorgan Chase subsequently said it believed at least one of the tested transactions had been incorrectly categorized.
The bank said the Visa transaction had not been identified to it as a cryptocurrency purchase and should not have generated rewards under the terms of its credit card program.
Chase opened a case with Visa over the transaction.
The New York attorney general’s office has also said it is aware of the matter and is reviewing it.
Crossmint, however, has defended the structure of its product.
The company argues that eligible memecoins can be treated differently from conventional cryptocurrencies because securities regulators have described some memecoins as digital collectibles rather than securities.
Payments specialists have questioned whether that securities-law distinction has any relevance to Visa and Mastercard’s separate card-processing rules.
The dispute illustrates an increasingly complicated intersection between cryptocurrency regulation, payment-network rules and the expanding range of digital assets available to ordinary consumers.
On Fomo, buying major cryptocurrencies such as Bitcoin or Ethereum normally requires users to take a more conventional route.
A customer can transfer cryptocurrency into the app from another wallet or use a debit card to acquire a stablecoin such as USDC and then swap that asset for Bitcoin or Ethereum.
Robinhood Wallet follows a similar general process.
Users can move assets into their self-custody wallet, connect certain services, connect a Robinhood account or, in supported locations, use an outside on-ramp provider such as Sardine.
Selected memecoins can be purchased differently.
Users can choose an eligible token, select Apple Pay or Google Pay, use a credit card and receive the memecoin directly in their wallet.
Crossmint says the Token Checkout product is deliberately structured so the purchase resembles buying an individual digital product rather than depositing money into a cryptocurrency account.
The company advertises the service as requiring no separate Know Your Customer identity check for Checkout transactions.
Crossmint distinguishes Token Checkout from its conventional cryptocurrency on-ramp.
The on-ramp is intended for customers who want to fund a wallet with cryptocurrency and requires identity verification in applicable situations.
Checkout is designed for someone buying a particular digital item, which can include an NFT, approved memecoin or closed-loop token.
Crossmint says Checkout can accept debit cards, credit cards, Apple Pay, Google Pay and certain crypto payment methods depending on the asset.
The company claims the checkout flow can be completed in less than 30 seconds.
Crossmint also says that although Token Checkout does not require a separate KYC process, transactions are subject to anti-money-laundering monitoring and fraud controls.
Its documentation says a dedicated anti-fraud team monitors activity.
The company also advertises chargeback protection and approval rates between approximately 95% and 98%, compared with what it describes as a roughly 55% industry benchmark.
Fonz Olvera, Crossmint’s head of strategy, has described the lack of friction as one of the product’s defining features.
From a customer’s perspective, the experience is intended to be simple: enter the app, choose an approved token and complete the purchase through a familiar mobile payment method.
Crossmint handles the payment-processing infrastructure behind the scenes.
The company’s integration with Fomo dates back to 2025.
Crossmint has said Fomo’s weekly active trader count increased roughly sevenfold after the Token Checkout feature was introduced.
By April 2026, Crossmint said more than 68,000 people it characterized as first-time cryptocurrency buyers had used the Apple Pay checkout feature through Fomo.
Robinhood Wallet added its Crossmint integration more recently, in August 2026.
The feature puts Crossmint’s checkout technology inside a much larger financial ecosystem because Robinhood is a publicly traded brokerage with tens of millions of users across its broader products.
Fomo is smaller but has expanded rapidly.
The social-first crypto trading company raised $75 million in a Series B financing round in June 2026 at a valuation of $550 million.
Index Ventures led the funding round, with participation from Union Square Ventures and Benchmark, among others.
Fomo was founded by former employees of decentralized derivatives platform dYdX and is designed to simplify on-chain trading.
The app attempts to hide much of the complexity normally associated with cryptocurrency, including switching networks, bridges, gas fees and separate wallets.
The company is non-custodial, meaning users retain control over their own assets rather than depositing them into a centrally controlled exchange account.
Crossmint’s checkout feature fits directly into that simplified design philosophy.
Fomo Chief Executive Se Yong Park has previously said the objective is to make purchasing a memecoin feel no more complicated than buying an everyday consumer product.
Crossmint represented only a minority of Fomo’s overall funding flows at the time the payment questions emerged.
Fomo said approximately 7% of user inflows were coming through Crossmint, while most deposits were processed through other providers.
The company also said each payment provider is responsible for operating its service in accordance with applicable legal and regulatory requirements.
Robinhood similarly referred questions about the specific payment mechanics to Crossmint.
Johann Kerbrat, senior vice president and general manager of Robinhood Crypto, said Robinhood uses specialized partners precisely because payments infrastructure is complicated and those companies are responsible for the mechanics on their side of the transaction.
The controversy centers heavily on something most consumers rarely see: the merchant category code attached to a credit card purchase.
Merchant category codes, or MCCs, are standardized numerical classifications used by card networks, banks and payment processors to describe what type of business or transaction is involved.
The code can affect processing rules, risk controls, fees, rewards and how banks treat a transaction.
The tested WIF transactions on both Visa and Mastercard were categorized under MCC 5815.
Visa defines that category as Digital Goods Media covering electronically delivered books, movies, digital artwork, images and music.
Direct cryptocurrency purchases normally fall into very different categories.
Visa’s merchant standards state that purchases of cryptocurrency and other liquid financial assets by nonfinancial institutions generally belong under MCC 6051.
Certain financial institutions can also process relevant transactions through MCC 6012.
Visa additionally requires cryptocurrency transactions to carry particular information identifying their nature.
Mastercard similarly uses MCC 6051 for applicable direct cryptocurrency purchases and requires an identifier indicating that cryptocurrency is involved.
Those distinctions can have an immediate effect on consumers.
Credit card companies commonly treat direct cryptocurrency purchases as cash-like transactions rather than ordinary retail purchases.
Such transactions may receive different fees or cash-advance treatment and are often excluded from rewards programs.
Chase’s Ultimate Rewards program, for example, excludes cryptocurrency and other cash-like transactions from earning standard points.
The WIF purchases examined in the investigation behaved differently.
The credit cards processed them under the digital-goods category and awarded normal purchase rewards.
Chase said its systems determine rewards eligibility using transaction data supplied through the payment networks.
That means the bank relies on merchants, payment processors and acquiring institutions to provide the correct merchant category code and other required indicators.
After reviewing the Visa purchase, Chase said the transaction had not been flagged as involving cryptocurrency.
The bank concluded that MCC 5815 appeared incorrect and that the purchase should not have earned rewards.
Its response was to open a case with Visa, which Chase described as its normal process when it believes a transaction has been incorrectly categorized.
Crossmint said its supported products undergo review and onboarding with relevant partners and stakeholders before they are offered to customers.
The company maintains that the classification is appropriate for qualifying digital collectibles.
Visa itself stopped short of publicly determining whether Crossmint’s transactions were properly coded.
The payment network said participants in its system are required to comply with Visa rules and that it reviews potential cases of noncompliance when they come to its attention.
Visa said details of individual compliance reviews are confidential.
Mastercard also declined to specifically approve or reject Crossmint’s interpretation after examining transaction information.
The company said it generally works with acquiring banks and issuing banks to correct compliance problems and educate participants about card-network requirements.
Payments specialists say merchant classifications are often decided relatively early in a company’s relationship with its acquiring bank or payment processor.
Doug Kantor, general counsel of the National Association of Convenience Stores and a member of the Merchants Payments Coalition, has explained that businesses are typically assigned a merchant category during onboarding based on questions about what they sell and how they operate.
Once assigned, the classification may not be continuously reexamined unless something triggers additional scrutiny.
That structure can leave room for disagreements when businesses introduce new products or operate in areas that do not fit neatly into old payment categories.
Crossmint argues that memecoins are such a category.
Its rationale relies partly on the regulatory treatment of certain crypto assets by the Securities and Exchange Commission.
In March, the SEC released a major interpretation of how federal securities laws apply to different types of digital assets.
The framework created several categories, including digital commodities, digital collectibles, digital tools, stablecoins and digital securities.
The SEC stressed that many crypto assets are not themselves securities.
Certain memecoins can fall into the digital-collectible category when their value comes primarily from cultural significance, community interest and market speculation rather than from the managerial efforts of an identifiable business or promoter.
Crossmint says that classification supports treating eligible memecoins more like collectible digital goods.
The company’s Token Checkout eligibility rules define eligible memecoins generally as fungible tokens connected with internet memes, characters, current events, trends or other humorous themes.
Tokens must be reviewed and approved by Crossmint individually before they can use the checkout system.
The company’s documentation says its team continually monitors cryptocurrency markets and proactively approves eligible memecoins across partner platforms.
At one point, Crossmint said approved memecoins accounted for roughly 80% of daily memecoin trading volume.
The list can contain an unusually broad variety of assets.
Around the time the payment system was reviewed, Fomo offered approximately 150 tokens through Crossmint’s Token Checkout.
Well-known examples included WIF, Fartcoin, Pudgy Penguins’ PENGU token and President Donald Trump’s Official Trump memecoin.
Much smaller and more unusual tokens were available as well.
Those reportedly included a token called “testicle,” separate tokens sharing the ticker ASTEROID, assets using versions of the Wojak meme and numerous other small-market-cap memecoins.
Crossmint also supports what it calls closed-loop tokens.
Those are fungible digital assets designed primarily to operate inside a particular product or ecosystem, similar in concept to an in-game currency or loyalty point.
The company places restrictions on what cannot use Token Checkout.
Crossmint says it supports secondary-market purchases of approved memecoins, not initial primary sales.
Its policies exclude investment-style tokens, assets intended to function as payment currency, securities and tokens that would trigger money-transmission requirements under the company’s interpretation.
Olvera has argued that memecoins represent a different category from cryptocurrencies primarily intended to function as money.
He has said the company’s experience began with simplifying credit and debit card purchases of NFTs and other digital collectibles, and Token Checkout applies the same idea to eligible memecoins.
Crossmint also says the memecoins it supports through this system cannot themselves be used as monetary value in payments.
That position becomes more complicated once a user owns the token.
Someone using Robinhood Wallet can potentially swap the purchased memecoin into another cryptocurrency with only a few actions.
When questioned about that possibility, Olvera said the later swap is separate from the original collectible purchase because it occurs inside a self-custodial wallet.
He described that swap as outside Crossmint’s Token Checkout transaction.
There was also a terminology issue in that explanation.
Bitcoin and Ethereum are not treated as securities under the SEC-CFTC framework cited by Crossmint.
The agencies’ March guidance describes assets such as Bitcoin and Ethereum as digital commodities.
That distinction illustrates why experts say securities regulation and card-network processing requirements should not be treated as interchangeable.
Yesha Yadav, an associate dean at Vanderbilt Law School whose work includes cryptocurrency and payments regulation, has argued that the SEC’s treatment of a memecoin under securities law does not determine how Visa or Mastercard must classify a card transaction.
The two systems govern different questions.
The SEC’s analysis focuses on whether an asset or transaction is subject to federal securities laws.
Card-network rules determine how purchases moving through Visa and Mastercard infrastructure must be categorized and processed.
Visa’s cryptocurrency categories do not provide a clear general exception saying that a memecoin classified as a collectible for securities purposes can automatically be processed as digital media.
Yadav has also noted that “collectible” is not a universal legal classification that automatically carries the same meaning across every regulatory or commercial regime.
Ashley Ebersole, co-founder and chief legal officer of tokenization company tx and a former senior SEC counsel, has similarly questioned how much practical regulatory weight should be placed on the line between digital commodities and digital collectibles.
Both categories can consist of crypto assets that are not securities.
If regulators eventually bring those assets under a broader digital-asset framework, they could be subjected to many of the same requirements regardless of which non-security category applies.
Questions also emerged about whether every token offered through Token Checkout clearly met Crossmint’s own collectible criteria.
DEGEN was among the supported assets.
The token originated as a reward token associated with users of the Farcaster social ecosystem but later developed a larger role in the Degen Chain Layer 3 blockchain network.
The SEC’s crypto framework distinguishes functional blockchain tokens from collectible assets in part by whether the tokens help validate, secure, operate or incentivize activity on a blockchain system.
That raised questions about whether DEGEN more closely resembled a digital commodity than a digital collectible.
Another token that attracted scrutiny was GENIUS, the native token associated with the non-custodial Genius trading platform.
GENIUS had a fully diluted valuation of approximately $265 million around the time of the investigation.
Unlike obvious memecoins, its connection to an internet meme, humorous trend or collectible concept was not immediately clear.
Genius Trading has also attracted significant institutional attention.
YZi Labs, the family office connected with Binance co-founder Changpeng Zhao, made what was described as a multi-eight-figure investment in Genius Trading, and Zhao became an adviser to the business.
After questions were sent to Crossmint about how DEGEN and GENIUS qualified for Token Checkout, both tokens became unavailable for Apple Pay or Google Pay purchases on Fomo and Robinhood Wallet.
Crossmint did not provide a token-by-token explanation for their eligibility.
The company instead reiterated that not every blockchain-based asset should be treated identically and that transaction classification depends on the underlying product being sold.
Crossmint says different products can consequently follow different payment flows, compliance requirements and merchant classifications.
Other major cryptocurrency platforms take a more conventional approach.
Coinbase, for example, requires identity verification for card-funded cryptocurrency purchases.
The company does not support U.S. cryptocurrency purchases using credit cards.
In a test involving WIF, the purchase process required identity verification and a debit card and appeared to involve purchasing a stablecoin before swapping it into the memecoin.
The resulting card transaction was classified in a quasi-cash category consistent with Visa’s rules covering cryptocurrency transactions.
Coinbase has said the SEC’s March crypto interpretation did not cause it to change identity-verification requirements based on whether an individual token might qualify as a digital collectible.
That contrast highlights the practical importance of Crossmint’s model.
A consumer using a traditional exchange may have to create an account, verify identity, provide a debit card or bank funding source, purchase cryptocurrency and then exchange that asset for the desired token.
Through the Crossmint flow embedded in Fomo or Robinhood Wallet, an approved memecoin can instead appear almost like an ordinary mobile e-commerce purchase.
The remaining question is whether the payment infrastructure behind that experience complies with the card networks’ rules.
Responsibility does not necessarily rest with a single company.
Payment transactions involve multiple participants, including the merchant or service provider, payment processor, acquiring bank, sponsor bank, card network and the financial institution that issued the customer’s credit card.
Yadav has said acquiring institutions can carry substantial due-diligence responsibilities because they are responsible for submitting transactions into the Visa and Mastercard networks.
Chase identified Checkout.com as the acquiring processor associated with the Visa test transaction.
Checkout.com declined to discuss a specific merchant relationship or individual transaction.
The company said generally that merchants using its services are required to comply with applicable card-network rules, KYC and anti-money-laundering requirements, and merchant category standards.
Checkout.com’s U.S. acquiring infrastructure uses Cross River Bank and Pathward as sponsor banks that provide access to card networks and settlement infrastructure.
Pathward said it was not the acquiring or sponsoring bank for the memecoin transactions involved in the test.
Cross River Bank did not publicly respond to repeated requests for comment about the transaction.
Kantor said that when a merchant-category dispute is ultimately resolved, merchants can often bear much of the practical consequence if the network determines transactions were incorrectly coded.
Crossmint is meanwhile attempting to expand its own financial-regulatory footprint.
Olvera said the company is pursuing money-transmission licenses throughout the United States and regulatory licenses in additional jurisdictions, including the United Kingdom and Canada.
The objective is to expand Crossmint’s payment products internationally.
Olvera has acknowledged that efforts to remove friction for consumers can create tension with complicated financial rules, but he characterized that tension as manageable if companies remain engaged with regulators and confirm their legal interpretations.
Crossmint says compliance is increasingly important as it develops into a more regulated financial company.
At the same time, the company remains focused on making digital-asset purchases feel as simple as ordinary e-commerce.
That tension sits at the center of the current controversy.
Crossmint sees Token Checkout as a digital-commerce product allowing consumers to buy collectibles with familiar payment methods.
Chase sees at least one of the tested transactions as a cryptocurrency purchase that appears to have been coded incorrectly.
Visa and Mastercard have stopped short of making a public determination but say compliance with their network rules is required.
New York’s attorney general is reviewing the issue.
Legal specialists question whether an SEC securities classification can justify a different card-network classification.
And the removal of DEGEN and GENIUS from the checkout system after questions about their eligibility has added scrutiny to how Crossmint determines which tokens qualify.
The outcome could matter well beyond a handful of memecoins.
If Crossmint’s interpretation survives scrutiny, developers could have a model for allowing consumers to purchase certain non-security crypto assets through familiar credit card checkouts without treating every transaction like a traditional cryptocurrency on-ramp.
If Visa, Mastercard, acquiring banks or regulators reject the interpretation, Crossmint and its partners could be forced to modify how the transactions are classified and processed.
That could affect whether credit cards remain available, whether consumers earn rewards, whether additional identity checks are required and which tokens can be purchased through the system.
For now, the consumer experience remains strikingly simple compared with traditional cryptocurrency purchases.
Select an eligible memecoin.
Use Apple Pay or Google Pay.
Pay with a credit card.
Receive the token directly inside a self-custody wallet.
Behind that apparently simple checkout, however, sits a much more complicated unresolved question over whether buying a memecoin is being processed as what consumers probably assume it is — a cryptocurrency transaction — or as something closer to buying a piece of digital media.