IRS Targets DeFi Front Ends for Reporting

U.S. Internal Revenue Service (IRS) has published a rule that targets front-end providers of DeFi services - like liquidity pools, lending platforms, and overcollateralized stablecoin protocols. While DeFi smart contracts operate autonomously without human involvement (making it impossible to demand transaction data directly from them), users rarely interact with these contracts directly. Instead, they rely on user-friendly websites, browser extensions, or apps. The IRS is now requiring the developers of these interfaces to report user transactions starting in 2027.

Organizations like the Blockchain Association, DeFi Education Fund, and Texas Blockchain Council have already announced plans to challenge this requirement in court.

But here’s a thought: what if this rule stays? AI agents can already create front ends, register domains, and purchase hosting services using cryptocurrency - all without human involvement. By 2027, this could become the norm.

Imagine the IRS trying to compel an AI agent to submit transaction reports. The only enforcement tool seems to be cutting off network access. But an AI agent could simply rent a cloud server, pay for it in crypto, and relaunch itself there.

If the IRS rule holds, the demand for AI agents’ services could surge.

The tokens of AI agents are already available for exchange on rabbit.io. 🚀