Interpreting the DragonFly 2025 Airdrop Report: The Untapped Cake of Crypto Airdrops in the U.S
American users and the government did not benefit from the airdrop.Author: Shenchao TechFlow
It's 2025, have you ever made a fortune from airdrops?
If you haven't, don't be sad, because some people aren't even eligible to participate in airdrops—like our friends across the ocean in the United States.
A hard-to-believe fact is that the professional airdrop industry has flourished in the Chinese community, while in the U.S., due to regulatory restrictions, most crypto projects consider avoiding risks when formulating airdrop policies, excluding users from the U.S.
Now, with the U.S. government implementing various pro-crypto policies, the president taking various crypto-related actions, and more American companies starting to accumulate Bitcoin, the U.S. has never had as much influence in the crypto market as it does today.
Changes in U.S. policy are also affecting the airdrop market landscape and providing references for innovation in other countries.
In this context, the well-known VC Dragonfly released the "Airdrop Status Report 2025," attempting to quantify the impact of U.S. policies on airdrops and the crypto economy through data and analysis.
Shenchao TechFlow has distilled and interpreted the core viewpoints of this report, summarized as follows.
Key Conclusion: U.S. Users and Government Have Not Benefited from Airdrops
- U.S. Users Limited by Geographic Restrictions:
Affected User Count: In 2024, approximately 920,000 to 5.2 million active U.S. users (accounting for 5%-10% of U.S. cryptocurrency holders) are unable to participate in airdrops or use certain projects due to geographic restrictions.
Proportion of U.S. Users Among Global Crypto Addresses: In 2024, 22%-24% of global active crypto addresses belong to U.S. users.
- Economic Value of Airdrops:
Total Value of Airdrops: Among 11 sample projects, the total value of airdrops is approximately $7.16 billion, with around 1.9 million global users participating, and the average median amount received per address is about $4,600.
Income Loss for U.S. Users:
In 11 geographically restricted airdrop projects, the estimated income loss for U.S. users is between $1.84 billion and $2.64 billion (2020-2024).
According to an analysis of 21 geographically restricted airdrop projects by CoinGecko, the potential income loss for U.S. users could reach $3.49 billion to $5.02 billion (2020-2024).
- Tax Revenue Loss:
Personal Tax Revenue Loss:
Federal tax revenue loss: approximately $418 million to $1.1 billion (2020-2024).
State tax revenue loss: approximately $107 million to $284 million.
Total tax revenue loss: approximately $525 million to $1.38 billion, not including capital gains tax revenue generated from token sales.
Corporate Tax Revenue Loss:
- Due to crypto companies relocating, the U.S. misses out on substantial corporate tax revenue. For example, Tether (the issuer of USDT) reported a profit of $6.2 billion in 2024, which could have contributed about $1.3 billion in federal tax and $316 million in state tax if fully subject to U.S. tax regulations.
- Impact of Crypto Companies Relocating:
Cryptocurrency companies choose to register and operate overseas due to regulatory pressure, further exacerbating tax revenue losses in the U.S.
Tether is just one case illustrating the widespread negative impact of the industry's relocation on the U.S. economy.
Why Are Airdrops Restricted in the U.S.?
The regulatory environment in the U.S. restricts the airdrop market due to regulatory uncertainty and high compliance costs. Here are the key reasons:
1. Ambiguous Regulatory Framework
U.S. regulatory agencies (such as the SEC and CFTC) tend to establish rules through enforcement actions rather than creating clear legal frameworks. This "enforcement-first" model makes it difficult for crypto projects to predict which actions are legal, especially for emerging models like airdrops.
2. Airdrops May Be Considered Securities
Under U.S. securities law, the SEC uses the Howey Test to determine whether an asset qualifies as a security. The core of the Howey Test is:
Is there an investment of money?: Did users invest money or other resources to obtain the asset?
Is there an expectation of profits?: Do users expect to profit from the appreciation of the asset or the efforts of the project team?
Are profits derived from the efforts of others?: Are the profits primarily derived from the work of the issuer or a third party?
Is there a common enterprise?: Do investors share in the profits and risks?
Many airdrop tokens meet these criteria (e.g., users expect token appreciation), leading the SEC to classify them as securities. This means that issuers must comply with cumbersome registration requirements or face hefty fines or even criminal liability. To avoid these risks, many projects choose to directly exclude U.S. users.
3. Complexity of Tax Policies
Current tax laws require users to pay income tax on the market value of tokens received at the time of the airdrop, even if the tokens have not been sold. This unreasonable tax burden, combined with subsequent capital gains taxes, further diminishes U.S. users' willingness to participate in airdrops.
4. Widespread Geographic Restrictions
To avoid being deemed as offering unregistered securities to U.S. users, many projects opt for geographic restrictions. This strategy not only protects the issuers but also reflects the stifling effect of the U.S. regulatory environment on innovation.
Additionally, the report provides a detailed chronological account of the changing attitudes of U.S. crypto regulatory laws towards airdrops and key events where significant projects were excluded from the U.S.
How Do Crypto Projects Block U.S. Users?
These measures are aimed at protecting their compliance and avoiding penalties for unintentional violations. Here are common blocking methods:
1. Geoblocking
Geoblocking sets virtual boundaries to restrict users from specific regions from accessing services or content. Projects typically use users' IP addresses, DNS service countries, payment information locations, and even language settings during online shopping to determine users' locations. If a user is identified as being from the U.S., access will be blocked.
2. IP Address Blocking
IP blocking is one of the core technologies of geoblocking. Every internet device has a unique IP address, and when a user attempts to access a platform, the system will block IP addresses marked as U.S. through a firewall.
3. VPN Blocking
Virtual Private Networks (VPNs) can hide users' real IP addresses to protect privacy, but issuers also monitor traffic from VPN servers. If an IP address shows unusually high access or diverse activities, the platform may block those IPs to prevent U.S. users from bypassing restrictions.
4. KYC (Know Your Customer) Verification
Many platforms require users to complete KYC processes and submit identity information to confirm they are not U.S. residents. Some projects even require users to declare their non-U.S. status through wallet signatures. This method is not only used to prevent illegal financing and money laundering but also serves as an important means to block U.S. users.
5. Clear Legal Statements
Some projects explicitly state in their airdrop or service terms that U.S. users are not allowed to participate. This "good faith effort" aims to show that the project has taken steps to limit U.S. users, thereby reducing legal liability.
Although issuers strive to block U.S. users, U.S. regulatory agencies (such as the SEC and CFTC) have not provided clear compliance guidance, leading issuers to lack a clear understanding of what constitutes "sufficient blocking measures."
Blocking measures also increase operational costs and compliance risks. For example, relying on third-party geoblocking services (like Vercel) may lead to compliance risks due to data errors, with the responsibility ultimately falling on the issuers.
What Are the Economic Impacts of the U.S. Absence from Crypto Airdrops?
How significant are the economic losses caused by U.S. policy restrictions?
To quantify the impact of geographic blocking policies on U.S. residents' cryptocurrency airdrops and assess the broader economic consequences of these policies, the report analyzes and estimates the number of U.S. cryptocurrency holders, evaluates their participation in airdrops, and defines the potential economic and tax losses due to geographic restrictions.
In practical terms, the report selects 11 geographically restricted airdrop projects and 1 non-geographically restricted airdrop as a comparison, conducting in-depth data analysis based on user count and economic value.
1. U.S. Users' Crypto Participation Rate
Among an estimated 18.4 million to 52.3 million cryptocurrency holders in the U.S., approximately 920,000 to 5.2 million active U.S. users in 2024 are affected by geographic restrictions, including limited participation in airdrops and project usage.
(Original images from the report, compiled by Shenchao TechFlow)
As of 2024, it is estimated that 22% to 24% of global active crypto addresses belong to U.S. residents.
The total value generated from the sample of 11 projects is approximately $7.16 billion, with about 1.9 million participants globally in the airdrop, and the average median value received per eligible address is approximately $4,600.
The following table breaks down the amounts by project name.
(Original images from the report, compiled by Shenchao TechFlow)
2. Losses for U.S. Users Not Participating in Airdrops
(Original images from the report, compiled by Shenchao TechFlow)
Based on the airdrop data in the table above, it is estimated that U.S. residents missed out on potential income ranging from $1.84 billion to $2.64 billion from the sample group between 2020 and 2024.
Tax Revenue Loss
Due to airdrop restrictions, the estimated tax revenue loss from 2020 to 2024 ranges from $1.9 billion (the lower limit estimated by the report sample) to $5.02 billion (the upper limit estimated in other CoinGecko studies).
Using personal tax rates, the corresponding federal tax revenue loss is estimated to be between $418 million and $1.1 billion, while state tax revenue loss is estimated to be between $107 million and $284 million. Overall, the total tax revenue loss in the U.S. over these years is estimated to be between $525 million and $1.38 billion.
Offshore Losses: In 2024, Tether reported a profit of $6.2 billion, surpassing traditional financial giants like BlackRock. If Tether were headquartered in the U.S. and subject to full U.S. taxation, this profit would incur a 21% federal corporate tax, estimated at $1.3 billion in federal tax. Additionally, considering the average state corporate tax rate of 5.1%, it is expected to generate $316 million in state tax. In total, the potential tax loss due to Tether's offshore status could be around $1.6 billion annually.
Those Crypto Companies Leaving the U.S.
Some companies have completely exited the U.S., such as:
Bittrex: It shut down its U.S. operations, citing "regulatory uncertainty" and increased frequency of enforcement actions, particularly from the SEC, making it "impractical" to operate in the U.S.
Nexo: After 18 months of ineffective dialogue with U.S. regulators, it gradually phased out its products and services in the U.S.
Revolut: This UK-based fintech company suspended cryptocurrency services for U.S. customers due to changes in the regulatory environment and ongoing uncertainty in the U.S. crypto market.
Other companies are preparing for the worst-case scenario (i.e., lack of regulatory clarity and ongoing enforcement) and are beginning to establish operations overseas or shift focus to non-U.S. consumers. These companies include:
Coinbase: As the largest crypto exchange in the U.S., it has opened operations in Bermuda to take advantage of a more favorable regulatory environment.
Ripple Labs: After years of legal battles with the SEC, as of September 2023, 85% of job openings are for overseas personnel, with the proportion of U.S. employees decreasing from 60% to 50% by the end of 2023.
Beaxy: After the SEC sued the company and its founder Artak Hamazaspyan for operating an unregistered exchange and brokerage in March 2023, the exchange announced it would suspend operations due to the surrounding uncertain regulatory environment.
Some Pragmatic Suggestions
- Establish a "Safe Harbor" mechanism for non-fundraising cryptocurrency airdrops:
Issuers should provide detailed information on token economics (such as supply, distribution methods), governance mechanisms, potential risks, and any usage restrictions.
Insiders should adhere to a lock-up period of at least three months to prevent insider trading or early profit-taking.
Tokens should only be distributed through non-monetary contributions (such as services, participation in network activities, or prior holding qualifications); direct monetary transactions will disqualify their safe harbor status.
Expand the applicability of U.S. Securities Act Rule 701 to participants on technology platforms, particularly for crypto tokens distributed through airdrops or service compensation.
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 should not be considered taxable income upon receipt.
Taxes should be levied when tokens are sold or exchanged for other assets, as this is when tokens have liquidity and quantifiable market value.
Utilize the political transition period brought about by election cycles to provide unique opportunities for regulatory innovation.
The SEC should establish clear rules defining when digital assets are considered securities; abandon strategies of "regulatory enforcement" and "regulatory intimidation," and shift towards formal rule-making. Provide clear compliance guidance to help crypto startups innovate with peace of mind.
