Encrypting the data at rest has the major benefit of making its physical location completely irrelevant. Transmitting the data while encrypted has the major benefit of making the physical location of all the nodes through which it passes completely irrelevant. Hence the only thing that matters is the geographic location of where the data is processed, because that is where you decrypt it. All privacy laws should be written with that understanding, but they are not. They are written by people who are ignorant of this simple logic, because they don't understand how Internet works, how encryption works, how routing traffic works and how little it has to do with borders of countries, etc etc.
Healthcare privacy laws in my country, for example, have this exactly 100% backwards. They force me to store data in my country, but say nothing about where it is processed. And of course there's no hard requirement to encrypt data at rest. It's hard to imagine how you can get this kind of law more wrong.
The XKCD cartoon is another way of stating (part of) my point - it doesn't matter where the stuff is stored (provided you encrypt it properly), what matters is the point at which it can be accessed. A dead owner's encrypted iPhone in the FBI forensics lab is more secure from intrusion by the FBI than an unencrypted hard drive I locked in my basement. Even if I use, like, 10 locks, and they don't (yet) know it's there.
At some point, North Korea has copied the encrypted data for later data mining.
In 2021 that encryption scheme for some reason is no longer considered secure. Even if you stepped using it in 2014, the data from the time you used it up until you stopped may be compromised.
An unencrypted hard drive stored in a locked Chinese basement is probably quite a bit more secure from FBI intrusion than the encrypted iPhone that they physically possess.
Physical access still matters a lot.
Not if there is rate limiting, or other means of preventing the entire set of data being dumped. That is to say, storing it encrypted makes it harder to get the full set of data. Though, I guess in practice the client application would likely be able to request all of the data from storage.
I run a Filecoin node and I store the data of approximately 200 clients in my homelab. I don't know who they are, or what they store, because it's all end to end encrypted.
And no -- my clients don't trust me, it's crypto, it's trustless :)
Storing data encryped in north korea, with the capability to fetch and decrypt that data in Sweden, is approximately equivalent to storing the unencrypted data in Sweden (as far as hackers, law enforcement, etc. are concerned), except you've now added the additional risk that north korea only needs to exfiltrate one encryption key to gain access to all your data.
More reasonably, if you're storing the data in north korea, that's also where you have the compute, and therefore the decryption keys, and therefore someone in north korea who knows what they are doing can quitely steal the decryption keys, make a copy of your data, and view all the data unencrypted.
Encryption is only foolproof(ish) when you are sending data between two trusted endpoints. That's not the case for the cloud, the place you are storing the data is also almost always one of the "trusted" endpoints. Encrypting the data at rest has some minor benefits (being a hurdle to accessing the data, meaning that theft of a single hard disk doesn't get data) but doesn't provide any form of unbreakable security.