Visa is reportedly moving to shut down a loophole that has allowed cryptocurrency buyers to rack up credit card rewards on meme coin purchases by having those transactions coded as ordinary digital media, according to a source familiar with the matter.
The Loophole Under Scrutiny
At the heart of the issue is how meme coin transactions have been categorized within Visa's payment network. Rather than being flagged as cryptocurrency or high-risk purchases, some of these buys have reportedly been processed under generic "digital media" merchant category codes. That classification allowed cardholders to earn standard rewards points, cash back, and other perks typically reserved for everyday spending.
The distinction matters because banks and card issuers generally treat crypto purchases differently from routine consumer transactions, often applying cash-advance fees or excluding them from rewards programs altogether. By slipping through as digital media, meme coin buys effectively enjoyed the best of both worlds.
A quirk in how transactions were coded turned speculative token buys into rewards-earning purchases.
A Narrow Win for the Banks
The move comes after a broader legislative effort fell short. Banks had pushed for tighter rules governing stablecoins as part of the Clarity Act, but that measure failed to advance. With the larger regulatory battle lost, JP Morgan is said to have secured a smaller, more targeted victory as Visa steps in to address the coding issue directly.
The change reflects ongoing tension between traditional financial institutions and the fast-moving world of digital assets. Banks have long argued that crypto activity carries elevated risk and should be treated accordingly, rather than blended into standard spending categories.
For consumers who had been quietly farming rewards through meme coin purchases, the update could close off an unexpected perk. The shift may also signal how payment networks intend to tighten controls around crypto-related spending going forward.
- Meme coin buys were reportedly coded as "digital media" rather than crypto
- The classification let cardholders earn standard rewards
- The change follows the failure of the Clarity Act's stablecoin provisions
- JP Morgan is described as securing a narrower regulatory win
What It Signals
The development underscores how much of the friction between banks and crypto plays out in the technical details of payment processing rather than headline legislation. Even as sweeping regulatory frameworks stall, incremental adjustments at the network level can reshape how everyday users