Americans Losing Billions in Potential Crypto Airdrop Earnings Due to Geoblocking

A recent analysis by Dragonfly shows that Americans may have foregone up to $2.64 billion from missed cryptocurrency airdrops.

Moreover, a separate study from CoinGecko places this potential loss even higher, estimating it could reach $5.02 billion. But what factors contribute to these staggering figures?

Restricted Access for Americans to Crypto Airdrops

According to Dragonfly’s report, based on data from 12 significant crypto airdrops, including well-known platforms like Uniswap and 1inch, it was found that 11 of these airdrops restricted access for users with US IP addresses. This IP blocking could potentially affect between 920,000 and 5.2 million active American users. The analysis indicates that 5–10% of the estimated 18.4 to 52.3 million crypto holders in the U.S. are impacted by these geoblocking measures in 2024.

Approximately 22–24% of all active cryptocurrency addresses globally belong to US residents. The overall value of the airdrops analyzed by Dragonfly totaled around $7.16 billion. Globally, around 1.9 million individuals claimed these airdrops, averaging about $4,600 per qualifying wallet.

Based on these findings, Dragonfly estimates that American users lost between $1.84 billion and $2.64 billion from 2020 to 2024 due to the 11 airdrops prohibiting US participation. CoinGecko conducted a parallel assessment but considered a broader dataset, assessing 21 airdrops that excluded U.S. participants, estimating losses could range from $3.49 billion to $5.02 billion.

This exclusion of American IP addresses from airdrop participation appears to be a strategic move to mitigate potential repercussions from regulatory authorities, such as the Securities and Exchange Commission (SEC).

Impact on US Tax Revenue

The estimated federal personal income tax revenue loss from these geoblocked airdrops has been pegged between $418 million and $1.1 billion, with state tax revenue losses estimated at $107 million to $284 million. This results in an overall potential tax revenue loss of approximately $525 million to $1.38 billion.

The migration of cryptocurrency-related operations overseas has further exacerbated the losses in U.S. tax revenue. For instance, companies like Tether moving their headquarters to locations such as El Salvador may have cost the U.S. government around $1.3 billion in federal corporate taxes and an additional $316 million in state taxes.

As crypto projects remain cautious in light of the looming legal challenges, the blocking of U.S. users is viewed as a less risky alternative compared to the potential high costs of litigation, as evidenced in cases involving Ripple, Kraken, and Coinbase.