Terra’s new blockchain is trying to compensate its users with an “airdrop” campaign. What is this concept? What are the tax implications?
The new Terra blockchain was born on Saturday, after the recovery plan to save the Terra ecosystem was accepted by the community. The founder of Terra, Do Kwon had specifically planned to compensate its users by carrying out an “airdrop” campaign.
An airdrop is a free distribution of a cryptocurrency (token) made by the creators of this same cryptocurrency. For a project, this type of method allows it to gain visibility or, in Terra’s case, to regain some lost legitimacy.
Depending on each airdrop project, the company behind it can choose to distribute them to everyone or a list of people depending on certain conditions, such as already owning this cryptocurrency, being on a project’s platform or having some business in decentralized finance (DeFi). . Examples vary with each airdrop project.
For example, as part of the Terra blockchain, the reception of airdrops takes place according to a precise distribution plan established by its founder Do Kwon. To receive these airdrops (in this case the new luna cryptocurrency), users had to have the stablecoin usd (UST) or the cryptocurrency luna either on their wallet (digital cryptocurrency wallet) or on a cryptocurrency trading platform (such as Binance). . Some platforms have already carried out the distribution of the airdrops, the FTX platform having to do this on Tuesday.
“You have to be careful what you get”
Returning to the airdrop system, cryptocurrencies are sent directly to a user’s wallet. He can receive these tokens when he has heard of an airdrop campaign, but also without being aware of such a campaign, hence staying very vigilant.
“You have to be careful about what you receive, and in particular find out before opening the airdrop. Some airdrops you receive can be worth thousands of dollars, you have to be careful when you want to transfer them to stablecoin or another cryptocurrency, if it is a scam and the ‘user clicks on it, all his tokens are sent to the attacker “, explains to BFM Crypto Marouane Essaïdi, digital asset manager of TheDiggers, a community that seeks to provide financial education on cryptocurrencies.
For example, today PeckShield, a blockchain security specialist, posted a warning on the moon airdrop on Twitter, in order to avoid scams.
In general, airdrops allow users to more easily integrate into the world of cryptocurrencies.
“People were able to receive large sums as soon as they arrived on the market, depending on their activity on certain platforms. For example, as a result of their activities on the OpenSea platform, they could receive amounts of approximately $ 1,000 to $ 50,000,” adds Marouane. Essaïdi.
Since the new blockchain Terra has launched its airdrop campaign, what are the tax consequences for the French who benefit from it?
The airdrop taken in the calculation of the capital gain
The classic situation is that a casual investor, subject to the 30% flat tax regime, will receive airdrops. It will have a free acquisition, so there will be no increase in the purchase price, nor taxation of the capital gain of the acquisition. However, it has two scenarios available: once the airdrop is received, the user converts it to another digital asset (such as stablecoin, mainly USDT or USDC) and reuses it for new investments.
Or he decides to exchange them for the euro and when the tokens are resold with the euro, the capital gain related to this operation will then be equal to the sale price.
For example, for an occasional investor who received an airdrop of 10,000 units worth, for example, 10,000 euros, on the resale of the tokens immediately, the capital gain is equal to the sale price – purchase value (equal to 0 if done immediately). In this case = 10,000 euros.
In the event of a subsequent sale, the capital gain realized following the sale of the tokens resulting from the airdrop and other tokens, would be equal to:
The sale price (€ 10,000) – (the initial investment (€ 1,000 base) x the sale price (€ 10,000)) / the total value of the portfolio which is made up of the airdrop tokens and the other tokens of the portfolio ( for example 50,000 euros) = 9,800 euros.
“In any case, we find this airdrop when an individual declares these transactions related to cryptocurrencies. If a person receives many airdrops despite being an occasional investment, he will have a large amount of transfer price and therefore a significant taxable capital gain: the airdrop will be taken. in fact, even if the airdrop is free and not taxed, this does not prevent the need to subsequently declare the capital gains “, explains to BFM Crypto Nicolas Verger, lawyers at Revo Avocats.
Also, there is a specific scenario where people benefit from the airdrop following the provision of services for the benefit of a crypto company or project, which sends airdrops in return. Here is the tax risk at the time of allocation.
This law firm has particularly dealt with cases where investors have benefited from the airdrop due to their quality as service providers. “This situation entails, in our opinion, a taxation of the acquisition profit at the time of the attribution in the tax category of the income deriving from these services (salaries, BIC or BNC, which can reach a total taxation of up to about 60% of gain on acquisition).
Also, in the midst of a cryptocurrency bull run, meaning when cryptocurrencies are going through a strong period of growth, some may see their price multiply by 100.
“In case of control, in particular due to the declaration of significant capital gains, it will be necessary, if necessary, to justify to the taxman the collection of these tokens from airdrop. In the situation where the investor has free attributions and also a connection with the project , the investor could be retrained as a professional resulting in a recovery of part of his income from cryptocurrency transactions. In the next few years on some portfolios, the tax administration may attempt to retrain from the casual (individual) investor to the usual (professional) “warns Nicolas Verger.