Geoblocking Has Denied US Investors $2.6 Billion in Airdrops Since 2020: Report
Airdrops have gained prominence as an effective strategy for blockchain projects aiming to enhance user engagement and promote decentralized value distribution. Despite their potential, a recent report by Dragonfly Capital has shed light on the significant economic ramifications stemming from geoblocking policies that restrict participation within the U.S. This exclusionary approach has not only curtailed financial opportunities for users but has also led to substantial economic losses for both individuals and government entities.
### Geoblocking Airdrops Cost US Billions
In its comprehensive analysis, Dragonfly investigated 12 airdrops executed between 2019 and 2023, specifically assessing the impact of geoblocking on U.S. cryptocurrency investors. The study estimates that between 920,000 and 5.2 million U.S. users were rendered ineligible to participate in these airdrops, translating to an approximate 5-10% of local investors. Notably, despite the United States commanding a noteworthy 22-24% stake in global crypto activity—evidenced by a substantial number of active blockchain addresses—these users have been systematically excluded from accessing new token distributions.
Financially, this exclusion carries pronounced consequences. The 11 geo-blocked airdrops under examination collectively amassed about $7.16 billion in value, with 1.9 million global claimants receiving an average median value of $4,600. For U.S. investors specifically, the estimated fiscal loss ranges between $1.84 billion and $2.64 billion from 2020 to 2024. Expanding the analysis using a broader dataset from CoinGecko suggests that the total revenue forfeited by U.S. individuals could soar to between $3.49 billion and $5.02 billion within the same timeframe.
### Tether’s Offshore Status Costs US
The implications extend beyond immediate financial losses; they pose a serious concern for tax revenue as well. The inability of U.S. users to participate in these airdrops has resulted in an estimated tax revenue loss ranging from $525 million to $1.38 billion, which encompasses both federal and state funds. The reported figures indicate losses between $418 million to $1.1 billion in federal tax revenues and $107 million to $284 million at the state level.
The situation is further aggravated by the offshore nature of many crypto businesses, which deprives the U.S. government of vital tax income. A case in point is Tether, a prominent issuer of stablecoins, which has reported profits of $6.2 billion in 2024 while being registered offshore. Had Tether been subject to U.S. corporate taxation, it could have contributed approximately $1.3 billion in federal taxes and an additional $316 million at the state level.
This scenario not only highlights the financial disparities faced by U.S. residents in the rapidly evolving crypto landscape but also underscores the pressing need for regulatory reevaluation. As the crypto market continues to mature, the effects of geoblocking policies and the migration of crypto businesses offshore could result in significant economic consequences for the United States.
