Hold onto your hats, crypto enthusiasts! Imagine if Tether, the big kahuna of stablecoins, was based in the good ol' US of A. It could've dropped a jaw-dropping $1.6 billion in taxes into Uncle Sam's pocket!
Airdrops are not just the latest crypto craze; they're a game-changer for blockchain projects, boosting user engagement and spreading the digital wealth around like confetti. But here's the kicker: thanks to some pesky geoblocking policies, especially in the States, the party's been crashed. These restrictions have not only rained on the parade of potential investors but also meant serious missed moolah for both users and the government.
Dragonfly, a venture capital powerhouse, just spilled the beans on how this geoblocking business has left US users out in the cold. Their study, which took a deep dive into 12 airdrops from 2019 to 2023, found that a whopping 920,000 to 5.2 million US crypto fanatics were blocked from joining the fun. That's a hefty 5-10% of local investors getting the cold shoulder!
Even though the US is a major player in the global crypto scene, holding 22-24% of all active blockchain addresses, it seems like these policies are keeping a huge chunk of the potential user base from cashing in on newly minted tokens. Talk about a bummer!
The report didn't stop there. It crunched the numbers and found that 11 of those geo-blocked airdrops collectively churned out a staggering $7.16 billion in total value. On average, worldwide claimants pocketed about $4,600 per eligible address. But for our US friends, they missed out on a potential windfall of $1.84 billion to $2.64 billion from 2020 to 2024.
And here's where it stings even more: when you expand this percentage of lost participation across a broader dataset, the potential revenue missed by US users skyrockets to between $3.49 billion and $5.02 billion during the same period. Ouch!
But wait, there's more. This isn't just about individual wallets taking a hit. The report flagged some serious implications for tax revenue too. The US government's tax coffers took a battering, with estimated losses ranging from $418 million to $1.1 billion in federal tax revenue and $107 million to $284 million in state taxes. All in all, missed tax collections from these geo-blocked airdrops tally up to a staggering $525 million to $1.38 billion. And that's without factoring in the potential capital gains taxes down the line.
Oh, and here's the cherry on top: more crypto businesses are packing their bags and setting up shop offshore, taking their tax potential with them. Just look at Tether. In 2024, they reported a cool $6.2 billion in profits while chilling offshore. If they were fully taxable in the US, they could've forked over an estimated $1.3 billion in federal corporate taxes and $316 million in state taxes. Now that's what we call a missed opportunity!
