Supreme Court Upholds IRS Access to Crypto User Data Without Warrant

The Supreme Court’s decision to decline the case of Harper v. Faulkender has significant implications for cryptocurrency users and their privacy rights. The case centered around James Harper, a former user of several cryptocurrency platforms, who challenged the IRS’s ability to obtain his transaction records without a warrant. The IRS had acquired Harper’s data through a “John Doe” summons issued to Coinbase, seeking records of users who had transacted over $20,000 in digital assets between 2013 and 2015.

Harper argued that the IRS’s actions violated his Fourth Amendment protections against unreasonable searches and seizures, as well as his Fifth Amendment due process rights. He also contended that the summons failed to meet statutory requirements and should be reviewable under the Administrative Procedure Act. However, the lower courts ruled against Harper, stating that he had no reasonable expectation of privacy over data shared with third-party exchanges and no legal basis to challenge the summons. The First Circuit Court of Appeals further ruled that the IRS’s actions did not constitute final agency action subject to judicial review.

The Supreme Court’s refusal to hear the case leaves these rulings in place, upholding the IRS’s authority to access user information from crypto platforms without individualized suspicion. This decision reinforces the “third-party doctrine,” which holds that individuals forfeit privacy protections when they share information with intermediaries. Critics argue that this doctrine fails to reflect modern digital realities, where using an online service should not mean the government can access personal data without oversight.

The core issue in Harper’s challenge—whether individuals maintain constitutional privacy interests in data held by crypto exchanges—remains unresolved. This ruling has significant implications for cryptocurrency privacy, as it allows the IRS—and potentially other agencies—to access certain financial records without obtaining a warrant. For cryptocurrency users concerned about privacy, this decision highlights ongoing debates about data ownership and individual control in the digital age.

Exchanges like Coinbase must comply with these requests, even if they disagree with the government's actions. This can include account activity, login history, and balances. In contrast, using a non-custodial wallet gives users greater control over their assets and data, with fewer intermediaries involved. When using a self-custodial wallet, transaction history remains publicly visible on the blockchain, but linking those transactions to a real-world identity is more difficult without centralized records. While it does not guarantee complete anonymity, it provides an additional level of privacy that centralized platforms typically cannot offer.