Airdrops have become a crucial tool in blockchain projects for user engagement and value distribution. However, a recent Dragonfly report highlighted the unintended consequences of geoblocking, particularly in the USA.
Analysis of Geoblocking Losses
Dragonfly analyzed 12 airdrops executed between 2019 and 2023 to discover that between 920,000 and 5.2 million US crypto users could not participate due to restrictions. These policies excluded a significant portion of potential users amongst at least 22-24% of active blockchain addresses in the US.
Impact on Tax Revenue
The report emphasized significant tax revenue losses due to US users' inability to access airdrops. Missed federal and state tax collections ranged from $525 million to $1.38 billion. Additional taxes on capital gains were not considered.
Issues with Tether’s Offshore Status
Beyond individual losses, the report also highlighted corporate tax revenue ramifications from crypto businesses' offshore status. Tether reported $6.2 billion in profits in 2024 but contributed no taxes in the US on this amount.
Dragonfly's report showcases significant financial and economic losses for the US due to airdrop geoblocking, highlighting the need to reevaluate the existing policy for more effective participation in the blockchain economy.
