Depending on what markets your company operates in, the privacy regulation may vary. However, the best practice for all Adobe Analytics implementations is to avoid storing any PII like name, email, phone number and some other. IP address is considered PII in European Union. European businesses are going to be regulated by GDPR (general data protection regulation) as of 25th May 2018 https://www.eugdpr.org
Even if you do not pass IP over to Adobe Analytics manually (in a dedicated variable), it is determined by the backend and could be stored as is. There are a few options you may want to use to be compliant with the privacy regulation — 1) the last octet of IP address is cut off before being stored; 2) IP address is obfuscated before being stored.