It’s been more than sixteen years since the world’s first cryptocurrency, Bitcoin, burst onto the scene, promising a new era of digital finance. But as the crypto market has grown into a sprawling, borderless ecosystem, regulators are hitting a stubborn roadblock: privacy laws that stand in the way of effective cross-border oversight.
On October 20, 2025, the Financial Stability Board (FSB)—the global watchdog operating under the Bank for International Settlements—sounded the alarm again. According to a report covered by multiple outlets, the FSB warned that privacy laws are blocking the kind of data sharing regulators need to keep tabs on global digital asset markets. This isn’t the first time the issue has come up, but the urgency is mounting as the stakes grow higher.
“Sixteen years after Bitcoin’s launch, regulation remains inconsistent, with differing national approaches causing data gaps and fragmented oversight,” the FSB stated in its latest findings. In other words, while some countries have built robust crypto frameworks, others lag behind or take a wildly different approach, making it nearly impossible to paint a complete picture of the risks swirling through the global crypto landscape.
But what’s really tying regulators’ hands? The FSB points squarely at secrecy laws. In some jurisdictions, these laws outright block the sharing of data with foreign regulators. Elsewhere, authorities drag their feet, citing privacy and reciprocity concerns before agreeing to any cross-border cooperation. As a result, authorities can’t monitor risks as closely as they’d like, and vital information about digital asset flows remains locked away or arrives too late to be useful.
The problem isn’t just theoretical. Reliable data on digital assets is still frustratingly scarce. Regulators, the FSB notes, are forced to lean heavily on commercial data providers, whose information is often incomplete or inconsistent. That means watchdogs are trying to spot financial stability risks with one eye closed, relying on patchy data that might not tell the whole story.
All this comes at a time when the urgency to monitor crypto-related risks is rising. The FSB’s report points out that, despite these growing concerns, little progress has been made since similar warnings were issued nearly four years ago. The same legal and institutional barriers that existed then are still very much in place today, and the gap between what regulators need and what they can actually access hasn’t narrowed.
“Addressing these legal and institutional barriers is essential to improving cross-border collaboration and ensuring more effective global oversight of crypto markets,” the FSB emphasized. But as of now, there’s no magic bullet—no clear solution that balances the need for data privacy with the demands of financial stability and oversight.
Interestingly, the issue isn’t confined to one region or regulatory bloc. Just this week, privacy watchdogs in the European Union and the United Kingdom approved data transfers between the two jurisdictions—but not without caveats. According to Euractiv, the decision came with warnings and conditions, highlighting how even closely aligned partners are treading carefully when it comes to sharing sensitive information across borders.
This patchwork approach has real-world consequences. Without consistent, reliable data, regulators can’t effectively track illicit activity, systemic risks, or even basic market trends. That’s a big deal when you consider the sheer volume of money—and potential for damage—swirling through the crypto sector. It’s not just about policing bad actors, either. Effective oversight can help prevent financial shocks that might spill over into the broader economy, affecting ordinary consumers and businesses alike.
So, what’s holding up progress? The FSB’s report suggests that, while everyone agrees on the need for better oversight, there’s no consensus on how to get there. Privacy laws are deeply rooted in national legal frameworks, often reflecting broader societal values about individual rights and government power. Changing them isn’t as simple as passing a new regulation—it can mean rewriting foundational legal principles or even amending constitutions.
Some jurisdictions, wary of overreach, are reluctant to hand over sensitive data to foreign authorities, fearing it could be misused or inadequately protected. Others worry that cooperation must be reciprocal—if they share data, they expect the same level of transparency in return. These concerns aren’t easily dismissed, especially in a world where data breaches and abuses of surveillance powers are all too common.
Meanwhile, the digital asset industry itself is evolving at breakneck speed. New products, platforms, and technologies are popping up faster than regulators can keep track. This only adds to the challenge, as authorities struggle to adapt old rules to new realities. The FSB’s report makes it clear: without better data and more robust cross-border cooperation, the risk of missing something big—be it a market crash, a massive fraud, or a systemic shock—remains uncomfortably high.
And yet, despite the gravity of these warnings, the FSB admits it has yet to propose concrete solutions. “The FSB has yet to outline concrete solutions for bridging the gap between data privacy protection and effective crypto regulation,” the report notes. That leaves regulators in a tough spot: aware of the risks, but hamstrung by legal and practical obstacles beyond their immediate control.
Looking ahead, the path to a solution will likely require a delicate balancing act. On one hand, privacy advocates are right to insist that individuals’ data should be protected from undue intrusion. On the other, the global nature of digital assets means that no single country can police the market alone. International cooperation—and some degree of legal harmonization—will be essential if regulators hope to keep up with the pace of change.
For now, the crypto sector remains a regulatory patchwork, with gaps and blind spots that could be exploited by bad actors or lead to unintended consequences. The FSB’s latest warning serves as a reminder that, despite years of debate, the world is still searching for a way to reconcile the promise of digital assets with the need for effective, coordinated oversight. Until that happens, the tension between privacy and regulation will continue to shape the future of finance.
As the debate grinds on, regulators, industry leaders, and privacy advocates alike will need to find common ground. The stakes are high, and the risks of inaction are becoming harder to ignore.
