Strict cryptocurrency regulations have prevented U.S. citizens from accessing airdrops — a method used to reward user communities with complimentary tokens — resulting in a financial loss for Americans estimated at around $2.6 billion in potential gains and about $1.4 billion in tax revenue for the government over the past four years, as reported by a venture capital firm.
In a recent analysis released on Tuesday, the firm specializing in digital assets provided several statistics based on an assessment of 11 significant airdrops that amassed over $7.16 billion since 2020. This included notable projects like 1inch, EigenLayer, Arbitrum, Athena, Optimism, and LayerZero. The average median claim per eligible participant in these airdrops was determined to be $4,562.
“We recognized the need for data that illustrates the impact of regulatory enforcement and how these regulations affect individuals, the overall economy, and the U.S. government,” stated an associate general counsel in an interview. “Therefore, we chose to examine airdrops as a specific case within the crypto sector to observe how existing policies might have produced adverse consequences.”
The report suggests that due to geoblocking—an approach that restricts U.S. IP addresses to sidestep regulatory scrutiny from entities like the Securities and Exchange Commission (SEC)—users in the U.S. lost between $1.84 billion and $2.64 billion in potential revenue from 2020 to 2024.
The actual losses could be even higher. A larger sample of 21 geoblocked airdrops assessed by another source indicated that the total potential revenue forfeited by U.S. residents could range from $3.49 billion to $5.02 billion during the same period.
Prolonged regulatory ambiguity in the U.S. has stifled innovation in the crypto space, prompting startups to relocate abroad while established companies face subpoenas and legal battles with regulators.
In addition to blockchain developers, venture capital firms like Union Square Ventures and Andreessen Horowitz have also come under SEC scrutiny for their investments in platforms such as Uniswap, which is indicated in the analysis as the most recent substantial airdrop that was not subject to geoblocking in the U.S.
This venture capital firm is not the only one to point out the issue of U.S. geoblocking: a fund based in New York has also conducted a study examining how cryptocurrency companies are compelled to resort to the blunt tactic of excluding all Americans out of fear of regulatory repercussions.
“When the regulations are unclear regarding what actions projects can take, it is often safer to simply geoblock to evade complications,” the associate general counsel noted. “The risk of facing costly litigation, requiring a defense, can lead to project shutdowns due to their inability to cover legal expenses.”
The report indicates that approximately one-fourth of all active crypto addresses across the globe are held by U.S. residents, with about 5.2 million users in America being geoblocked since 2020. This number does not account for those who utilize virtual private networks (VPNs) to bypass such restrictions.
Furthermore, the firm has estimated the tax revenue lost from geoblocked airdrop income between 2020 and 2024 to fall between $525 million and $1.38 billion in individual and corporate taxes.
UPDATE (March 11, 16:00 UTC): Incorporates additional data on larger airdrop sample size sourced from another analysis in the fifth paragraph.