Airdrop
Last updated 17 October 2026Last verified 17 October 2026
What is an airdrop in crypto?
A distribution of free tokens to wallet addresses, typically as a reward for early protocol use, community participation, or as a marketing mechanism. In the US, airdropped tokens are generally taxed as ordinary income once the recipient controls them, and rules differ elsewhere (the UK, for example, generally taxes an airdrop received for nothing only on later disposal). Tax at receipt catches recipients off-guard when the token subsequently loses value but the tax liability was fixed at receipt.
TradFi equivalentA free-share promotion from a broker, where the units arrive for using the service rather than for owning anything. In the US it is taxed as income on receipt at the value on the day, which becomes a problem when the asset falls afterwards and the liability does not.