Interpretation of DragonFly 2025 Airdrop Report: Encrypted Airdrop, a cake not yet distributed in the United States

Author:Shenchao TechFlow

It's 2025. Have you ever made a big profit from airdrops?

If you don't have one, don't be sad, because some people are not even qualified to participate in airdrops - such as American veterans across the ocean.

A fact that you are hard to believe is that professional hair-feeding industries are all in the Chinese circle, but due to the restrictions of policies and regulations, most crypto projects will consider avoiding suspicion when formulating airdrop policies and exclude users in the United States.

Now, with the formulation of various pro-crypto policies of the US government, various encryption-related actions of the President, and more American companies began to garner Bitcoin, the United States has never had the say in the crypto market as it is today.

Changes in US policies are also affecting the pattern of the airdrop market and providing reference for innovation in other countries.

Against this backdrop, well-known VC Dragonfly released the " Airdrop Status Report 2025 ", trying to quantify the impact of US policies on airdrops and crypto economy through data and analysis.

Shenchao TechFlow has refined and interpreted the core views of the report, and summarized them as follows.

Key Conclusion: U.S. users and governments, have not benefited from

airdrops

1. US users are restricted due to geographical blockade :

* **Number of affected users** : In 2024, about 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 blockade policies.

* **The proportion of US users in global encrypted addresses** : In 2024, 22%-24% of globally active encrypted addresses belong to US users.

2. The economic value of airdrops :

* **Total airdrop value** : Among the 11 sample projects, the total airdrop value was approximately **US$7.16 billion** , with approximately 1.9 million users participating worldwide, and the average median receivable amount for each address was approximately **US$4,600** .

* **Loss of revenue for US users** :

  * Among the 11 geo-blocked airdrop projects, the revenue losses of US users are estimated at **$1.84 billion to $2.64 billion** (2020-2024).

  * According to 21 geo-blocking airdrop projects analyzed by CoinGecko, potential revenue losses for U.S. users may reach as high as **$3.49 billion to $5.02 billion** (2020-2024).

3. Tax Loss :

* **Personal tax losses** :

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

  * State tax losses: approximately **$107 million to $284 million** .

  * Total tax losses: approximately **US$525 million to US$1.38 billion** , and do not include capital gains tax revenue generated from token sale.

* **Business tax losses** :

  * The United States missed a lot of corporate tax revenue due to the relocation of crypto companies. For example, Tether (USDT issuer) made **$6.2 billion** in 2024, which would have contributed approximately **$1.3 billion in federal taxes** and **$316 million in state taxes** if fully regulated by the U.S. tax.

4. Impact of crypto company migration :

* Cryptocurrency companies have chosen to register and operate overseas due to regulatory pressures, further exacerbating tax losses in the United States. 

* Tether is just one case, showing the widespread negative impact of overall industry migration on the US economy. 

Why are airdrops restricted in the United States?

The restrictions on the airdrop market in the United States are caused by regulatory uncertainty and high compliance costs. Here are the key reasons:

1. A fuzzy regulatory framework

U.S. regulators (such as the SEC and CFTC) tend to establish rules through enforcement actions rather than establishing clear legal frameworks. This "enforcement-first" model makes it difficult for crypto projects to predict which behaviors are legal, especially the emerging model of airdrops.

2. Airdrops may be considered as securities

According to the U.S. Securities Act, the SEC uses the Howey test to determine whether an asset belongs to a securities. The core of Howey's test is:

• Whether it involves investment in funds : that is, whether the user has paid funds or other resources to obtain the asset;

• Whether to expect profits : whether users expect to make profits through asset appreciation or project parties' efforts;

• Whether it depends on other people 's efforts : whether the income comes mainly from the work of the issuer or third party;

• Whether it is a common cause : whether investors share returns and risks.

Many airdrop tokens meet these conditions (such as users expect to appreciate the token), and are therefore recognized as securities by the SEC. This means that the project party needs to comply with cumbersome registration requirements, otherwise it may face high fines or even criminal liability. To avoid these risks, many projects choose to block US users directly.

3. Complexity of tax policies

Current tax laws require users to pay income tax based on the token market value when receiving airdrops, even if the token has not been sold yet. This unreasonable tax burden, coupled with subsequent capital gains tax, further reduces the willingness of US users to participate in airdrops.

4. The universalization of geographical blockade

To avoid being identified as providing unregistered securities to U.S. users, many projects choose to geo-block US users. This strategy not only protects the project party, but also reflects the suppression of innovation by the US regulatory environment.

At the same time, the report also clearly lists changes in the attitude of US crypto regulatory regulations towards crypto airdrops and events in which key projects are excluded from the United States according to the timeline.

How to block US users in encryption projects?

These measures are both to protect their own compliance and to avoid being punished for unintentional violations. The following are common blocking methods:

1. Geoblocking

Geo-blocking restricts users from accessing services or content in specific regions by setting virtual boundaries. Projects usually use the user's IP address, DNS service country, payment information location, and even the language settings when shopping online to determine the user's area. If the user is identified as from the United States, access will be blocked.

2. IP Blocking

IP blockade is one of the core technologies of geographical blockade. Each internet device has a unique IP address, and when a user tries to access the platform, the system blocks IP addresses marked as US through a firewall.

3. VPN blockade

A virtual private network (VPN) can hide the user's real IP address to protect privacy, but the project party will also monitor the traffic of the VPN server. If an IP address is found to have unusually high traffic or diversified activity, the platform may block these IP addresses to prevent US users from bypassing restrictions through VPNs.

4. KYC ( Know Your Customer ) Verification

Many platforms require users to complete the KYC process and submit identity information to confirm their non-US identity. Some projects even require users to declare their non-US identity through wallet signatures. This method is not only used to prevent illegal financing and money laundering, but also becomes an important means to block American users.

5. Clear legal statement

Some projects expressly state in airdrops or terms of service that US users are not allowed to participate. This "good faith effort" is intended to show that the project party has taken measures to limit U.S. users, thereby reducing legal liability.

• Although the project party strives to block US users, US regulators (such as the SEC and CFTC) do not provide clear compliance guidance , resulting in a lack of clear understanding of "sufficient blocking measures".

• Blocking measures also bring increased operating costs and compliance risks. For example, relying on third-party geoblocking services (such as Vercel) may lead to a risk of violations due to data errors, and the responsibility will ultimately be borne by the project party.

What is the economic impact of the United States' absence from crypto

airdrops?

How much economic losses are caused by the restrictions of US policies?

To quantify the impact of geo-blocking policies on cryptocurrency airdrops for U.S. residents and assess the broader economic consequences of these policies, the report analyzes estimates the number of U.S. cryptocurrency holders, assesses their participation in airdrops, and defines the potential economic and tax losses due to geo-blocking.

In terms of specific operations, the report selected 11 geo-blocked airdrop projects and 1 non-geographically blocked airdrop as a comparison, and conducted in-depth data analysis based on the number of people and economic value.

1. Cryptomatic participation rate of US users

Of the estimated 18.4 million to 52.3 million cryptocurrency holders in the U.S., approximately 920,000 to 5.2 million monthly active U.S. users were affected by geo-restricted policies, including airdrops and more limited participation in project use.

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

As of 2024, an estimated 22% to 24% of the globally active encrypted addresses belong to U.S. residents.

The total value of our sample generation for 11 projects was approximately US$7.16 billion, of which approximately 1.9 million people participated in airdrop collections worldwide, with an average median collection value of approximately US$4,600 per eligible address.

The following table breaks down the amount by project name.

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

2. Losses of US users not participating in airdrops

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

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

Tax Loss

Due to airdrop restrictions, estimated tax revenue losses from 2020 to 2024 range from $1.9 billion (the lower limit of the estimated report sample) to $5.02 billion (the upper limit of the estimated in other CoinGecko studies).

The corresponding federal tax revenue loss calculated using individual tax rates is expected to range between $418 million and $1.1 billion, and the state tax revenue loss is also approximately $107 million and $284 million. In general, the total tax revenue loss in the United States in recent years is between $525 million and $1.38 billion.

Offshore losses: In 2024, Tether reported a profit of $6.2 billion, surpassing traditional financial giants such as BlackRock. If Tether is headquartered in the United States and is subject to full U.S. taxes, the profit will be subject to a 21% federal corporate tax, estimated to be $1.3 billion in federal taxes. In addition, considering the average state business tax rate is 5.1%, a $316 million state tax is expected to be generated. Total, the potential tax losses caused by Tether's offshore state alone may be about $1.6 billion per year.

Those crypto companies leaving the United States

Some companies have completely withdrawn from the United States, such as:

Bittrex: It closed its operations in the United States, believing that the decision was due to “regulatory uncertainty” and the increase in frequency of enforcement actions, especially from the SEC, which made it “infeasible” to conduct business in the United States.

Nexo: After 18 months of invalid dialogue with U.S. regulators, U.S. products and services have been phased out.

Revolut: The UK-based fintech company suspended cryptocurrency services for U.S. customers, citing changes in regulatory environments and ongoing uncertainty in the U.S. crypto market.

Other companies are preparing for the worst-case scenario (i.e., no regulatory clarity and ongoing enforcement oversight) and are starting to set up operations overseas or switch to non-U.S. consumers. These companies include:

Coinbase: As the largest crypto exchange in the United States, it has opened operations in Bermuda to take advantage of a more favorable regulatory environment.

Ripple Labs: A long legal battle with the SEC for many years. As of September 2023, 85% of jobs were opened to overseas personnel, and by the end of 2023, the proportion of employees in the United States dropped from 60% to 50%.

Beaxy: In March 2023, the Securities and Exchange Commission accused the company and its founder Artak Hamazaspyan of operating an unregistered exchange and brokerage business, the exchange issued an announcement saying it had decided to suspend operations due to the uncertain regulatory environment around it.

Some pertinent suggestions

1. Establish a "safe harbor" mechanism for non-financing purposes :

* The issuer is required to provide detailed information on token economics (such as supply, distribution methods), governance mechanisms, potential risks and any usage restrictions.

* Insiders must comply with **a minimum three-month** **lock-up** **period** to prevent insider trading or preemptive profits. 

* Tokens can only be distributed through non-monetary contributions (such as services, participation in online activities, or prior holdings) and direct monetary transactions will disqualify their safe harbor. 

2. Extend the scope of application of Article 701 of the U.S. Securities Act (Rule 701) to participants in technology platforms, especially crypto tokens distributed through airdrops or service compensation.

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

* Airdrop tokens should not be considered taxable income upon receipt. 

* Taxes should be levied when the token is sold or converted into other assets, because the currency is liquid and has a quantifiable market value. 

4. Taking advantage of the political transition period brought about by the election cycle provides unique opportunities for regulatory innovation.

5. The SEC should establish clear rules that clarify when digital assets are considered securities; abandon the strategies of “regulation through law enforcement” and “regulation through intimidation” and turn to formal rulemaking. Provide clear compliance guidance to help crypto startups innovate with peace of mind.