Geoblocking Has Denied US Investors $2.6 Billion in Airdrops Since 2020: Report

Airdrops have become a crucial tool for blockchain projects to enable user engagement and decentralized value distribution.

However, Dragonfly’s latest report highlighted the unintended consequences of geoblocking policies, particularly in the United States, where restrictive regulations have led to missed financial opportunities, reduced participation, as well as significant economic implications for both users and governments.

Geoblocking Airdrops Cost US Billions

Venture capital firm Dragonfly’s study examined 12 airdrops conducted between 2019 and 2023, with a specific focus on the effects of geoblocking on US users. The findings revealed that between 920,000 and 5.2 million US cryptocurrency users were unable to participate due to these restrictions, which represented an estimated 5-10% of all local investors.

Despite the US maintaining a significant share of global crypto activity and accounting for 22-24% of all active blockchain addresses, these policies excluded a substantial portion of the potential user base from accessing newly distributed tokens.

The report quantified the financial impact of this exclusion. The analyzed 11 geo-blocked airdrops collectively generated approximately $7.16 billion in total value, as 1.9 million worldwide claimers received an average median value of $4,600 per eligible address.

For US users, however, the estimated lost revenue ranged between $1.84 billion and $2.64 billion from 2020 to 2024. When applying this percentage of lost participation to a broader dataset from CoinGecko, the estimated revenue forfeited by US persons rises significantly, reaching a range of $3.49 billion to $5.02 billion over the same period.

Tether’s Offshore Status Costs US

Beyond individual financial losses, the report also highlighted significant implications for tax revenue. The inability of US users to access these airdrops was observed to have resulted in an estimated loss of $418 million to $1.1 billion in federal tax revenue and $107 million to $284 million in state tax revenue.

In total, missed tax collections from geo-blocked airdrops range from $525 million to $1.38 billion, a figure that does not include additional taxes that could have been levied on capital gains upon the eventual sale of the tokens.

Additionally, the report noted that corporate tax revenue losses are exacerbated by the offshore migration of crypto businesses. As an example, Dragonfly pointed to stablecoin issuer Tether, which reported $6.2 billion in profits in 2024 while being incorporated offshore. If fully taxed under US jurisdiction, Tether alone could have contributed an estimated $1.3 billion in federal corporate taxes and $316 million in state taxes.