How upcoming US regulatory shifts could trigger a mass migration from traditional credit cards to crypto cards—and what investors need to know.
Introduction
Over 650 million credit cards belong to about 200 million Americans. Why so many? Because traditional credit cards come loaded with rewards—cash back, lounges, subscriptions—all funded by interest rates and swipe fees merchants pay. But big changes are on the horizon. The US government is moving toward capping credit card interest rates and slashing swipe fees. This could shrink the rewards ecosystem for conventional cards.
At the same time, crypto cards are gaining ground with increasingly lucrative rewards and potential regulatory benefits. What happens if Americans start shifting their spending from traditional credit cards to crypto cards? This article breaks down the forces shaping credit card rewards, the rise of crypto payment cards, and why this might spark a new wave of crypto adoption with major investment implications.
Credit Card Rewards: The Backbone of 650 Million Cards
Why Do Americans Have So Many Cards?
- 200 million Americans own around 650 million credit cards—about three to four cards per person on average.
- The primary allure? Rewards and perks.
Surveys show 70–80% pick cards based on these benefits. - Over 90% of credit card spending is on cards with high rewards.
- Rewards are funded by interest rates (~average 10% APR) and interchange (swipe) fees merchants pay each time a card is used.
The Interchange Fee Mechanism Explained
- When you buy something with a credit card, the merchant pays a fee—typically 1% to 3.25% of the sale.
- This fee funds cardholder rewards, bank profits, and payment networks.
- Merchants often pass these fees to consumers through higher prices.
- For example, a $100 item might effectively cost $114 because of interchange fees and associated costs.
Answer Box: What funds credit card rewards?
Credit card rewards are primarily funded by the interest charged on unpaid balances and merchant interchange fees—a small percentage fee merchants pay on each transaction.
Regulatory Pressure is Reshaping the Rewards Landscape
US Interest Rate Caps and Swipe Fee Reductions
- President Trump promised legislation to cap credit card interest rates at 10%.
- Separately, US lawmakers have proposed bills to significantly reduce interchange fees merchants pay.
- Both moves would squeeze the revenue funding traditional rewards programs.
What Does This Mean for Credit Card Rewards?
- Lower interest rate caps = less revenue from balances people carry.
- Reduced swipe fees = less revenue from merchants.
- Cards may have to cut back rewards or increase annual fees.
- Consumers could see less attractive benefits from traditional cards over time.
Crypto Cards: The Emerging Alternative Reward System
Early Growth and Market Traction
- In 2020, there were around 1 million crypto card holders.
- By the end of 2025, this number surged to 15 million, with estimates hitting 20 million by 2026.
- This represents a 15–20x increase in 5–6 years, an exponential growth rate.
Why Are Crypto Cards Gaining Popularity?
- In countries with weak currencies or banking issues, crypto cards provide easy access to stablecoins and decentralized finance (DeFi) benefits.
- In developed economies—US, UK—rewards remain competitive:
- For example, Coinbase's crypto card offers up to 4% cash back in BTC, close to average traditional rewards.
- Wealthier crypto cardholders contribute to about 80% of crypto card spending volume from North America and Europe.
Regulatory Tailwinds for Crypto Cards?
- US regulatory changes that cap rewards on traditional cards but allow or encourage crypto card rewards could tip the scales.
- This institutional support could drive mass migration to crypto cards in the highest-value markets.
- The result: accelerated crypto adoption and price rallies for tokens connected to popular crypto cards.
Data Callout: Nearly 35% of US consumer spending is made through credit cards, showing the enormous scale of this payment method. Any shift in rewards dynamics affects billions of dollars daily.
Risks and What Could Go Wrong
- Regulatory Uncertainty: Crypto regulations might also tighten, limiting crypto card rewards or introducing new hurdles.
- Crypto Market Volatility: Rewards paid in volatile tokens can lose value quickly, undermining appeal.
- Merchant Acceptance: If merchants delay adopting crypto payment infrastructure, crypto card adoption may slow.
- Consumer Behavior: Habit and trust in traditional cards won’t disappear overnight; mass migration depends on consumer education and incentives.
Actionable Summary
- Regulatory moves in the US are set to limit interest rates and swipe fees, threatening traditional credit card rewards.
- Americans hold on average 3–4 cards primarily for generous rewards funded by fees and interest.
- Crypto cards have grown rapidly, offering competitive or better rewards, especially in regions like the US and Europe.
- If US laws favor crypto card rewards, millions could switch, sparking major crypto adoption and token rallies.
- Investors should monitor regulatory developments and crypto card networks tied to leading tokens.
Why Follow This Shift with Wolfy Wealth PRO?
The evolving credit card rewards landscape could mark one of the largest on-ramps to crypto yet. Wolfy Wealth PRO provides timely alerts, deep dives on DeFi payment platforms, and entry points for crypto tokens tied to top crypto cards. Stay informed and position yourself for this developing wave with expert analysis tailored for investors.
Frequently Asked Questions
Q: Why do credit card companies offer rewards?
A: Rewards are designed to incentivize spending and card sign-ups, funded primarily by merchant swipe fees and interest from unpaid balances.
Q: How will capping interest rates affect credit card rewards?
A: Capping interest rates reduces card issuer revenue, likely forcing rewards programs to shrink or fees to rise.
Q: What makes crypto cards attractive compared to traditional cards?
A: Crypto cards offer competitive rewards paid in crypto assets, enabling users to accumulate tokens and benefit from DeFi ecosystems.
Q: How many people currently use crypto cards?
A: Crypto cards had about 15 million users worldwide by 2025, with projections reaching 20 million by 2026—a fast-growing user base.
Q: Could crypto regulations hurt crypto card adoption?
A: Yes, stricter regulation might limit crypto rewards or impose compliance costs, but current trends favor crypto card growth.
Disclaimer: This article provides educational content only and is not financial advice. Crypto investments carry risks due to volatility and regulatory changes. Always conduct personal research or consult a professional before investing.
By Wolfy Wealth - Empowering crypto investors since 2016
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Disclosure: Authors may be crypto investors mentioned in this newsletter. Wolfy Wealth Crypto newsletter, does not represent an offer to trade securities or other financial instruments. Our analyses, information and investment strategies are for informational purposes only, in order to spread knowledge about the crypto market. Any investments in variable income may cause partial or total loss of the capital used. Therefore, the recipient of this newsletter should always develop their own analyses and investment strategies. In addition, any investment decisions should be based on the investor's risk profile
