US users and the government have not benefited from airdrops.

It’s 2025 — have you ever made significant profits from an airdrop?

If not, don’t feel bad. Some people never even had the chance — like crypto users across the ocean in the United States.

A hard-to-believe fact is that while professional airdrop farming has become highly sophisticated in Chinese-speaking communities, most U.S. users are excluded from participating due to regulatory restrictions. Many crypto projects, when designing their airdrop policies, deliberately avoid including U.S. participants to steer clear of legal risk.

Now, as the U.S. government introduces more crypto-friendly policies, the president takes actions related to crypto, and more American companies begin accumulating Bitcoin, the country’s influence in the crypto market has never been greater.

Shifts in U.S. policy are reshaping the airdrop market landscape and providing a point of reference for innovation in other countries.

Against this backdrop, the well-known venture capital firm DragonFly has published the “Airdrop Status Report 2025,” attempting to use data and analysis to quantify the impact of U.S. policy on airdrops and the crypto economy.

TechFlow (Tech Flow Post) distilled and interpreted the key insights from this report, summarized as follows.

Key Findings: U.S. users and the government have not benefited from airdrops

1. US users are restricted due to geo-blocking:

   • Number of affected users: In 2024, approximately 920,000 to 5.2 million active US users (accounting for 5%-10% of US cryptocurrency holders) will not be able to participate in airdrops or use certain projects due to geo-blocking policies.

   • Proportion of US users in global encryption addresses: In 2024, U.S. users accounted for 22%-24% of active global crypto addresses.

2. Economic value of airdrop:

   • Total value of airdrops: Among the 11 sample projects, the total value of airdrops is approximately US$7.16 billion, with approximately 1.9 million users worldwide participating. The median amount claimed per address was around $4,600.

   • Lost income for US users:

     • In 11 geo-blocked airdrop projects, U.S. users’ estimated lost income ranged from $1.84 billion to $2.64 billion (2020-2024).

     • According to CoinGecko’s analysis of 21 geo-blocked airdrop projects, potential lost income for U.S. users could be as high as $3.49 billion to $5.02 billion (2020-2024).

3. Tax revenue losses:

   • Personal tax revenue losses:

     • Federal tax loss: approximately $418 million to $1.1 billion (2020-2024).

     • State tax revenue loss: approximately $107 million to $284 million.

     • Overall tax loss: approximately $525 million to $1.38 billion, not including capital gains tax revenue from token sales.

   • Corporate tax revenue losses:

     • Due to crypto companies relocating overseas, the U.S. has missed out on significant corporate tax revenue. For example, Tether (issuer of USDT) reported $6.2 billion in profits in 2024, which, if fully under U.S. tax regulation, could have contributed approximately $1.3 billion in federal taxes and $316 million in state taxes.

4. Impact of crypto company relocation:

   • Crypto companies, facing regulatory pressure, choose to register and operate overseas, further exacerbating U.S. tax losses.

   • Tether is just one example, illustrating the broad negative impact that industry relocation has on the U.S. economy.

Why are airdrops restricted in the United States?

The restrictive environment for airdrops in the U.S. stems from regulatory uncertainty and high compliance costs. The key reasons are as follows:

1. Ambiguous regulatory framework

U.S. regulatory bodies (such as the SEC and CFTC) tend to establish rules through enforcement rather than through clear legislation. This “enforcement-first” approach makes it difficult for crypto projects to predict what actions are considered legal, particularly for emerging models like airdrops.

2. Airdrops may be considered securities

Under U.S. securities law, the SEC applies the Howey Test to determine whether an asset qualifies as a security. The core criteria of the Howey Test are:

• Involvement of an investment of money: whether the user has contributed funds or other resources to receive the asset.
• Expectation of profit: whether users anticipate profit from the appreciation of the asset or the efforts of the project team.
• Reliance on the efforts of others: whether profits are primarily derived from the work of the issuer or a third party.
• Common enterprise: whether investors share profits and risks collectively.

Many airdrop tokens meet these conditions (for instance, users expect token value appreciation), leading the SEC to classify them as securities. This requires projects to comply with complex registration procedures, or else face hefty fines or criminal penalties. To avoid these risks, many projects choose to exclude U.S. users.

3. Complexity of tax policy

Current tax laws require users to pay income tax on the fair market value of airdropped tokens at the time of receipt, even if the tokens have not been sold. This unreasonable tax burden, combined with subsequent capital gains taxes, further reduces U.S. users’ willingness to participate in airdrops.

4. Widespread geo-blocking

o avoid being deemed as offering unregistered securities to U.S. users, many projects opt for geo-blocking. This approach not only protects the projects but also highlights how the U.S. regulatory environment suppresses innovation.

At the same time, the report provides a detailed chronological overview of how U.S. crypto regulatory policies have shifted in their stance toward airdrops, along with key events where major projects excluded U.S. users from airdrops.

How do crypto projects block U.S. users?

These measures are essentially “firewalls” that projects use to protect themselves in uncertain regulatory environments and reduce legal risks as much as possible. Here are the main methods:

1. Geoblocking

Geoblocking is implemented by setting virtual boundaries to restrict users in specific regions from accessing services or content. Projects usually use the user’s IP address, DNS country, payment information location, and even the language settings used when shopping online to determine the user’s location. If the user is identified as coming from the United States, they will be blocked from access.

2. IP Blocking

IP blocking is one of the core technologies of geoblocking. Every internet device has a unique IP address, and when users attempt to access the platform, the system uses firewalls to block IP addresses identified as being from the United States.

3. VPN blocking

Virtual Private Networks (VPNs) can hide the user’s real IP address to protect privacy, but project teams also monitor VPN server traffic. If an IP address shows abnormally high access volume or diversified activity, the platform may block these IP addresses to prevent U.S. users from bypassing restrictions through VPNs.

4. KYC (Know Your Customer) verification

Many platforms require users to complete KYC procedures and submit identity information to confirm they are not from the United States. Some projects even require users to sign a statement via wallet signature to declare that they are not U.S. residents. This method is not only used to prevent illegal financing and money laundering but has also become an important means of blocking U.S. users.

5. Clear legal statement

Some projects clearly state in their airdrop terms or service agreements that U.S. users are not allowed to participate. This kind of “good faith effort” is aimed at showing that the project has taken steps to restrict U.S. users and thus reduce legal liability.

• Despite these efforts to block U.S. users, regulatory agencies such as the SEC and CFTC have not provided clear compliance guidance, leaving project teams uncertain about what constitutes sufficient blocking measures.
• Blocking measures also increase operational costs and compliance risks. For example, relying on third-party geoblocking services (such as Vercel) may result in regulatory risk due to data errors, and the responsibility ultimately still falls on the project party.

How significant is the economic impact of the United States missing out on crypto airdrops?

How large are the economic losses caused by U.S. policy restrictions?

To quantify the impact of geoblocking policies on U.S. residents’ participation in cryptocurrency airdrops and to assess the broader economic consequences of these policies, the report estimates the number of U.S. cryptocurrency holders, evaluates their participation in airdrops, and defines the potential economic and tax revenue losses caused by geoblocking.

In terms of specific analysis, the report selected 11 airdrop projects that had implemented geoblocking and one non-geoblocked airdrop as a control group, conducting in-depth data analysis on the number of participants and economic value.

1. Crypto participation rate among US users

Among the estimated 18.4 million to 52.3 million cryptocurrency holders in the United States, around 920,000 to 5.2 million active U.S. users in 2024 are affected by geoblocking policies, including limitations in participating in airdrops and using certain projects.

(The original picture comes from the report, compiled by TechFlow)

As of 2024, it is estimated that 22% to 24% of active crypto addresses globally belong to U.S. residents.

The total value generated by the sample of 11 projects is approximately $7.16 billion, with around 1.9 million people worldwide participating in airdrop claims. The median claim value for each eligible address is approximately $4,600.

The table below breaks down the amounts by project name.

(The original picture comes from the report, compiled by TechFlow)

2. Losses Incurred by U.S. Users Due to Non-Participation in Airdrops

(The original picture comes from the report, compiled by TechFlow)

Based on the airdrop data in the table above, U.S. residents are expected to miss out on $1.84 billion to $2.64 billion in potential revenue for the sample group between 2020 and 2024.

3. Tax Revenue Losses

Due to restrictions on airdrops, the estimated loss in tax revenue between 2020 and 2024 ranges from $1.9 billion (the lower estimate based on the report’s sample) to $5.02 billion (the upper estimate according to other research by CoinGecko). Using personal tax rates for calculation, the corresponding federal tax revenue loss is estimated to be between $418 million and $1.1 billion. In addition, state tax revenue losses are estimated to be around $107 million to $284 million. Overall, the total tax revenue loss in the United States over these years is estimated to be between $525 million and $1.38 billion.

Offshore losses are also significant. In 2024, Tether reported profits of $6.2 billion, surpassing traditional financial giants like BlackRock. If Tether were headquartered in the United States and subject to full U.S. tax obligations, it would need to pay a 21% federal corporate tax, amounting to an estimated $1.3 billion in federal tax revenue. Furthermore, considering the average state corporate tax rate of 5.1%, an additional $316 million in state taxes would have been generated. In total, the potential tax revenue loss due to Tether’s offshore status could reach approximately $1.6 billion annually.

4. The Crypto Companies That Left the United States

Several companies have completely exited the U.S. market. For example:

Bittrex shut down its U.S. operations, citing “regulatory uncertainty” and the increasing frequency of enforcement actions, particularly from the SEC, making it “no longer feasible” to operate in the U.S.

Nexo gradually phased out its products and services in the U.S. after 18 months of unproductive dialogue with American regulators.

Revolut, a fintech company based in the United Kingdom, suspended cryptocurrency services for U.S. customers, citing changes in the regulatory environment and ongoing uncertainty in the U.S. crypto market.

Other companies are preparing for the worst-case scenario (continued lack of regulatory clarity and ongoing enforcement actions) and have started setting up overseas operations or focusing on non-U.S. customers. These companies include:

Coinbase, the largest crypto exchange in the U.S., has established operations in Bermuda to take advantage of a more favorable regulatory environment.

Ripple Labs has been involved in a lengthy legal battle with the SEC for several years. As of September 2023, 85% of its job openings were for positions outside the U.S., and by the end of 2023, the percentage of its workforce based in the United States had fallen from 60% to 50%.

Beaxy announced in March 2023 that it would suspend operations, citing the uncertain regulatory environment after the SEC charged the company and its founder, Artak Hamazaspyan, with operating an unregistered exchange and brokerage business.

Some constructive suggestions:

1. Establish a “safe harbor” mechanism for crypto airdrops that are not for fundraising purposes:

   • Issuers are required to provide details of token economics (e.g. supply, distribution method), governance mechanisms, potential risks and any usage restrictions.

   • Insiders are required to abide by a lock-up period of at least three months to prevent insider trading or front-running profits.

   • Tokens may only be distributed through non-monetary contributions (such as services, participation in network events, or prior qualification), and direct monetary transactions will disqualify them from the safe harbor.

2. Extend the scope of Rule 701 of the U.S. Securities Act to participants in technology platforms, particularly cryptographic tokens distributed through airdrops or compensation for services.

3. Align the tax treatment of cryptocurrency airdrops with the tax rules for credit card rewards or promotional gift cards to ensure fairness and reasonableness.

   • Airdrop tokens shall not be considered taxable income when received.

   • The tax should be levied when the token is sold or exchanged for other assets, as this is when the token becomes liquid and has a quantifiable market value.

4. Leverage the political transition period brought by election cycles as a unique opportunity for regulatory innovation.

5. The SEC should establish clear rules on when digital assets are classified as securities, moving away from “regulation by enforcement” and “regulation by intimidation” strategies, and instead focus on formal rulemaking. Clear compliance guidance should be provided to help crypto startups innovate with confidence.

Disclaimer:

1. This article is reproduced from [TechFlow]. The copyright belongs to the original author [TechFlow]. If you have any objection to the reprint, please contact Gate Learn team, the team will handle it as soon as possible according to relevant procedures.
2. Disclaimer: The views and opinions expressed in this article represent only the author’s personal views and do not constitute any investment advice.
3. Other language versions of the article are translated by the Gate Learn team and are not mentioned in Gate.io, the translated article may not be reproduced, distributed or plagiarized.