Bitcoin Privacy Laws Could Impede Cross-Border Crypto Data Access, FSB Says

• Privacy laws block timely cross-border data sharing, hampering supervision and risk detection.

• Fragmented oversight across multiple domestic authorities increases regulatory arbitrage and delays cooperative responses.

• FSB report (107 pages) notes regulators rely heavily on incomplete commercial data, creating accuracy and coverage gaps.

Crypto data privacy is hindering global oversight, says FSB — learn how privacy laws and fragmented supervision impede cross-border crypto regulation. Read COINOTAG’s analysis.

By COINOTAG — Published: 2025-10-16 | Updated: 2025-10-17

How does crypto data privacy hinder cross-border regulation?

Crypto data privacy limits regulators’ access to transaction and firm-level information needed to spot systemic risks and enforce rules across jurisdictions. The Financial Stability Board (FSB) identifies privacy laws, divided supervisory responsibilities and weak commercial data sources as primary barriers to coordinated, timely regulatory action.

Why are privacy laws a barrier to international crypto cooperation?

Privacy and secrecy statutes in some jurisdictions restrict firms from sharing data with foreign authorities. The FSB’s 107-page peer review highlights that such restrictions can delay or prevent information exchange, creating blind spots that hinder the assessment of cross-border exposures. Regulators and some firms also cite concerns about confidentiality breaches and limited guarantees of reciprocity, which further reduce willingness to participate in cooperative frameworks.

These legal constraints manifest in two concrete ways: delayed responses to cooperation requests, and outright non-participation in information-sharing arrangements. The FSB recommends addressing these legal and operational frictions to improve the speed and completeness of supervisory exchanges.

FSB wants the privacy barrier to be addressed

The FSB frames data confidentiality as a critical blind spot for global crypto oversight. In the report, the authority warns that “secrecy or data privacy laws may pose significant barriers to cooperation” and that such barriers can lead to “regulatory arbitrage, data gaps, and market fragmentation.”

Divided supervisory responsibilities within jurisdictions further complicate the picture: when multiple domestic agencies hold parts of the information set, assembling a complete view for cross-border coordination becomes cumbersome. The FSB notes that clarifying roles and strengthening legal frameworks for secure data exchange would reduce these frictions.

Practical safeguards are central to the FSB’s guidance: secure transmission protocols, strict confidentiality arrangements, and explicit reciprocity mechanisms are listed as likely enablers of more effective cooperation. The report is explicit that addressing these challenges should foster more efficient cross-border supervision as the crypto-asset landscape evolves.

Data providers lack accuracy and consistency

The FSB highlights that regulatory data sources remain limited, forcing authorities to depend on commercial data providers, surveys and fragmented public sources. These commercial providers vary in methodology, coverage and data quality, which undermines comparability and comprehensive oversight.

Key observations from the report include: authorities often rely on incomplete or inconsistent datasets; market participants may be unwilling to share sensitive details; and progress since similar findings nearly four years ago has been limited. These deficits complicate efforts to quantify exposures, stress-test markets and measure contagion channels.

Plain-text reference: Financial Stability Board (FSB) peer review report, 107 pages; Bank for International Settlements (BIS) funds the FSB.

Frequently Asked Questions

How can regulators overcome legal barriers to data sharing across borders?

Regulators can pursue harmonized confidentiality frameworks, introduce legal instruments that permit limited and secure cross-border data exchange, and establish reciprocal safeguards. The FSB recommends secure protocols and defined reciprocity to reduce firm reluctance and speed cooperation while protecting privacy rights.

What role do commercial data providers play in crypto regulation?

Commercial providers supply transaction and market data that many authorities currently lack, but inconsistent methodologies and gaps in coverage mean regulators cannot rely solely on them. Improving data standards and expanding regulatory reporting would increase accuracy and reduce reliance on incomplete commercial datasets.

Key Takeaways

• Privacy laws impede cooperation: Domestic secrecy rules can prevent or delay cross-border supervisory exchanges, creating blind spots.
• Fragmented supervision magnifies risk: Multiple domestic authorities with split responsibilities make comprehensive international coordination harder.
• Data quality needs improving: Authorities depend on commercial data that often lacks consistency—strengthened regulatory reporting and standards are needed.

Conclusion

The FSB’s peer review underscores that crypto data privacy, fragmented supervisory structures and inconsistent commercial data are tangible obstacles to effective cross-border crypto regulation. Addressing legal barriers, building secure exchange mechanisms and improving data quality are pragmatic steps recommended by the FSB and should be priorities for policymakers and supervisors. COINOTAG will continue to follow developments and report on implementation outcomes.