I also didn't know they did this. A couple of years ago, one of my friends told me the same happened to the Dashpay no-KYC VISA card, so this was predictable? From what I remember, the network came under pressure from some merchant (receiving) banks that the issuer wasn't compliant and it was basically said as: "either we will deny-list the issuer, or you fix this".

Banks are coercible, so all your bank rails are.