In essence, the Supreme Court’s refusal to take up the case means the last major ruling on the matter, issued by a lower federal court, now stands as a powerful legal precedent. That ruling was a decisive victory for the IRS.
The outcome solidifies the government’s authority to compel crypto exchanges to turn over vast amounts of customer transaction data.
By choosing not to intervene, the Court has affirmed that this data is subject to government scrutiny, cementing a key tool for tax enforcement and intensifying the privacy-versus-convenience debate for millions of crypto investors.
For the users, this means that financial information held on a centralized exchange like Coinbase does not carry the same constitutional privacy protections as personal papers grounded in the Fourth Amendment.
This amendment protects against unreasonable searches by recognizing a “reasonable expectation of privacy” in your private documents. Typically, a government warrant is required for access.
However, the protection essentially dissolves when applied to financial data shared with a third party like Coinbase. Under the long-standing “third-party doctrine,” by voluntarily entrusting your information to a company, you relinquish that expectation of privacy.
Consequently, the government can often access these financial records with a lower legal standard, such as a subpoena, rather than the more stringent warrant required to search your personal papers at home.
Now, if you trade crypto on a U.S. exchange, the government can get your account records, even if you personally did nothing suspicious. The legal reasoning is that once you share data with a third party, like a crypto platform, you give up some privacy rights.
For the crypto industry, this ruling could encourage more users to use self-custody wallets or decentralized exchanges, where they control their own keys and data.
But it also signals that U.S. authorities have broad surveillance power over centralized crypto businesses, putting digital assets squarely in the same regulatory orbit as traditional bank accounts.
In short: the IRS won big, privacy advocates lost, and centralized exchanges are under more pressure than ever to comply with sweeping government data requests.
Harper contended that the government was effectively conducting a fishing expedition, compelling a third party, Coinbase, to turn over private financial records without demonstrating probable cause related to a specific individual.
The court found that customers had entrusted their data to the exchange by using Coinbase, thereby forfeiting some privacy protection. The court also cited a requirement that financial institutions maintain certain records as further justification for the government’s access to the data.
Harper’s legal team was supported by amicus briefs from organizations like the Cato Institute and, as noted in the Supreme Court’s order, Professor Adam J. MacLeod. All of them argued that the digital age requires a re-evaluation of traditional privacy doctrines.
By declining to hear the appeal, the Supreme Court leaves the First Circuit’s decision as the prevailing precedent.
The outcome solidifies the IRS’s power to compel exchanges to disclose user data, a tool the agency views as essential for enforcing tax law.
For the crypto industry, the finality of this case may accelerate the user migration toward self-custody solutions and decentralized exchanges, where individuals maintain direct control over their private keys and data.
The ruling draws a clear line, confirming that users on centralized U.S. exchanges are subject to a level of financial surveillance comparable to that within the traditional banking system. The Supreme Court’s denial of certiorari effectively concludes this chapter on the matter.
