Can Third-Party Doctrine Survive in the Digital Age?
Picture a world where every financial move you make is chronicled, shared, and potentially subject to government scrutiny — not because you are accused of wrongdoing, but simply because you use a digital platform. This very scenario is now at the center of a fiercely contested legal battle, as Coinbase has thrust the issue of digital privacy into the national spotlight by urging the U.S. Supreme Court to reconsider how antiquated legal standards intersect with the realities of modern technology.
The roots of this debate stretch back to 2016 when the Internal Revenue Service (IRS) issued a sweeping “John Doe” summons to Coinbase, demanding detailed records on over 500,000 customers. After sparring in court, Coinbase ultimately was compelled to provide the IRS with data on a narrower group—still covering 8.9 million transactions across three years. Petitioner James Harper, one of those affected, filed suit, arguing that the IRS’s actions amounted to an unconstitutional seizure under the Fourth Amendment. For advocates of digital rights, Harper v. O’Donnell is about much more than crypto—it’s a referendum on whether users forfeit their right to privacy when sharing data with third parties online.
Coinbase’s legal brief rebukes the so-called “third-party doctrine”—a relic of the 1970s, when the Supreme Court decided that people lose their reasonable expectation of privacy over information shared with banks or telephone companies. In those days, most Americans never could have foreseen that sensitive financial lives would be managed on internet platforms subject to bulk government surveillance. “Giving up privacy for access to basic technology is not a choice Americans should have to make,” says digital civil liberties activist Cindy Cohn, executive director of the Electronic Frontier Foundation.
The IRS Summons: Mass Data Collection or Legitimate Oversight?
Defenders of broad regulatory authority argue that as digital currencies abound, agencies like the IRS must keep pace with an ever-evolving financial system. Tax enforcement, they insist, requires sophisticated tools, including the ability to obtain customer information from crypto exchanges. Yet a closer look reveals these John Doe summonses extend far beyond targeted investigations. Coinbase’s court filing warns that the current legal regime, left unchecked, “effectively allows the government to trace users’ every crypto transaction in the past and monitor every crypto transaction in the future.”
The implications go well beyond the immediate parties. According to privacy law expert Professor Orin Kerr of Berkeley Law, “The third-party doctrine, as currently interpreted, means that anytime you use technology—whether crypto wallets, social media, or cloud storage—you run the risk of government agencies accessing your private life without the traditional warrant requirements.” That risk compounds in a world where digital platforms serve as gatekeepers not just for cryptocurrency, but for banking, shopping, health, and communication.
Coinbase isn’t the only exchange to feel the IRS’s heavy hand. Kraken, another major crypto platform, faced a similar sweeping summons in 2021. These cases highlight how regulatory dragnet tactics are quickly becoming the norm, not the exception. Coinbase revealed that in 2024 alone, it received over 10,700 law enforcement requests, most from US agencies. Its stated policy is to “narrow overly broad or vague requests and provide only the minimum data required.” Still, the pressure to comply with ambiguous or overreaching demands remains a constant tension for digital platforms navigating a legal framework stuck in the last century.
“The question is not whether the government should have access to data, but whether such access should require reasonable suspicion and a warrant, as the Founders envisioned. In a digital-first world, the stakes for privacy have never been higher.”
What’s at Stake: Constitutional Reset or Status Quo?
The Supreme Court is now the stage for a conflict with sweeping implications for anyone with a digital footprint. Will the justices choose to reinterpret the Fourth Amendment’s guarantee against unreasonable searches in a way that reflects today’s realities, or will they double down on 20th-century doctrine that fails to protect the privacy of modern Americans?
Pro-business, pro-security voices frame this as a necessary tradeoff: some loss of privacy in exchange for combating evasion and illicit activity. Yet the danger in normalizing sweeping surveillance powers is not hypothetical. Consider the government’s history of controversial bulk data collection programs, later deemed unconstitutional. Edward Snowden’s 2013 revelations about the NSA’s phone surveillance program triggered national outcry and ultimately legislative reforms. Harvard constitutional law scholar Laurence Tribe notes that “the Fourth Amendment was designed for precisely these circumstances—the unchecked power of the state to pry into the lives of the innocent.”
What happens if the Court keeps the third-party doctrine as is? Digital exchanges and their users remain open books for any agency with a broad enough pretext. States, tech giants like X (formerly Twitter), and advocacy organizations have all weighed in, urging the Court to catch the law up to the times. Beyond that, there’s a ripple effect: the crypto sector, already bruised by uncertainty and regulatory volatility, saw market gains as traders interpreted the Court’s interest as a hopeful sign for safeguarding user privacy. Bitcoin and Ethereum prices ticked up, as did privacy-focused tokens like Monero. The message from the market was clear: privacy protections are a feature, not a flaw, of a healthy digital asset ecosystem.
Would a ruling for privacy advocates hinder IRS efforts at tax enforcement? Not necessarily. Targeted, warrant-based investigations remain an option. The real problem isn’t oversight—it’s suspicionless dragnet surveillance that betrays fundamental American values. A society that values liberty shouldn’t accept “just trust us” as a replacement for judicial oversight, least of all when so much of our lives transpire in ones and zeros.
Finding the Path Forward
The Supreme Court’s decision here stands to shape more than tax law. It will set the tone for how Americans—regardless of political stripe—navigate dignity and autonomy in a digitized world. Progressive values demand a renewal of Fourth Amendment protections that keep pace with technological advancement. The stakes are stark: either tilt toward unchecked state power or reaffirm the {bolded phrase} that our digital lives deserve constitutional shelter.
This is no longer a theoretical debate for academics or crypto enthusiasts. It’s a crossroads for privacy rights in the 21st century. If the Supreme Court takes up Harper v. O’Donnell, Americans everywhere should pay attention—not just those with a crypto wallet, but anyone who believes the Constitution’s promise of privacy remains as vital today as it was at the nation’s founding.
