You are, in too many words, essentially describing data minimization principles.

But I don't believe that the existence of black markets means we shouldn't regulate legal markets. Even if it's true that bad actors would try to find new ways to exploit data as regulations change, this doesn't negate the value of regulation entirely. Lots of industries face similar challenges (e.g. financial regulation, environmental protection) yet still benefit from regulatory frameworks.

Furthermore, the existence of loopholes is an argument for crafting more robust and adaptable regulations, and knowledgeable bodies to govern them--not for abandoning regulation altogether.