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.
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.