Recent findings indicate that U.S. users may have lost out on as much as $5.02 billion in potential earnings due to geo-restrictions on airdrops.
In the early days of the cryptocurrency sector, prior to the influx of pseudonymous creators into the memecoin space, blockchain innovators devised a method to reward users for their contributions to and support of projects. This practice became known as the airdrop.
Airdrops enabled projects to generate initial interest by motivating user engagement—such as making on-chain transactions—or to retroactively reward users of blockchain services. Occasionally, these airdrops turned out to be very profitable for the most engaged supporters, while at other times they yielded little. However, as airdrops grew in significance, they encountered political obstacles that led to the exclusion of U.S. users.
Now, data from a California-based venture firm shows that geo-restrictions may have deprived crypto addresses associated with U.S. users of billions of dollars. Fearing regulatory repercussions from U.S. authorities, numerous blockchain startup teams opted to exclude U.S. users entirely.
Billions in lost opportunities
Among an estimated 18.4 to 52.3 million crypto holders in the United States, between 920,000 and 5.2 million active users were impacted by geo-blocking just in 2024, according to the data. The firm estimates that about 22-24% of all active crypto addresses globally belong to U.S. residents, many of whom have been sidelined from airdrop opportunities.
“[…] the current regulatory environment in the U.S., with its focus on enforcement and absence of specific frameworks, has posed considerable challenges for projects looking to leverage this mechanism successfully.”
A legal representative from the firm remarked that the regulatory climate in the U.S. is undergoing noticeable changes, noting that agency attitudes seem to have shifted, opening up channels for constructive dialogue, which is encouraging.
“That said, policy developments are rarely straightforward — they tend to fluctuate, making it difficult to forecast when we might see tangible results. Currently, the conditions for legislation are the most favorable we’ve experienced in quite some time. Therefore, we are hopeful for some progress.”
An analysis of 11 blockchain projects carried out by the firm indicated that these projects generated approximately $7.16 billion in total value, with around 1.9 million claimants worldwide. The typical median claim per eligible address in their dataset was $4,600.
However, due to concerns about regulations, many projects opted to restrict U.S. users’ participation. Consequently, it is estimated that U.S. residents missed out on between $1.84 billion and $2.64 billion in potential airdrop revenue from 2020 to 2024.
The findings also highlight a notable decline in both active addresses and crypto developers in the Americas since 2015, dropping from 31% and 45% then to 22% and 24% today. One analyst believes this decline likely stems from multiple factors.
“We have seen some individuals exit the crypto space due to frustration with regulatory conditions and the emergence of AI, but perhaps more importantly, there has likely been an increase in the number of non-U.S. developers joining the industry.”
There’s a call for the U.S. to “support this budding industry” rather than drive talent overseas to maintain its competitive edge.
A broader analysis from another source reviewing 50 airdrops found that approximately $26.6 billion in total value has been distributed globally. By combining this data with previous estimates, the total revenue lost to U.S. users due to geo-blocking could be between $3.49 billion and $5.02 billion across 21 projects.
Losses in tax revenue
In addition to individual losses, it appears the U.S. government is also missing out on significant tax revenues. Based on lost airdrop income totaling between $1.9 billion and $5.02 billion between 2020 and 2024, federal tax revenue losses are estimated at anywhere from $418 million to $1.1 billion.
State tax losses could range from $107 million to $284 million, leading to an overall estimated loss in tax revenue of between $525 million and $1.38 billion over the same period.
Migration offshore
Regulatory ambiguity has also driven several major crypto firms to establish operations abroad, further diminishing U.S. tax revenue. A notable example is Tether, the issuer of the (USDT) stablecoin, which is based in the British Virgin Islands.
In 2024, Tether reported a profit of $6.2 billion, exceeding even financial powerhouse BlackRock. If Tether were to be headquartered in the U.S. and subject to federal and state taxes, it would potentially owe around $1.3 billion in federal taxes (assuming a 21% rate) and $316 million in state taxes (based on an average rate of 5.1%).
In total, the U.S. could be missing out on around $1.6 billion annually in tax revenue from Tether alone. The absence of crypto firms like Tether also translates to lost payroll taxes, local business taxes, and income tax revenues from their employees, compounding the economic impact.
With Tether being just one of numerous high-revenue companies operating offshore, the cumulative effects of these corporate migrations signify a significant missed opportunity for the U.S. government.