Emerging U.S. Regulation of Neural Data: Risks and Compliance Strategies for Privacy Officers

The rapid advancement of neurotechnology—from medical brain-computer interfaces (BCIs) like Neuralink implants to consumer wearables (e.g., EEG headsets for focus tracking or sleep monitoring)—has elevated neural data to a new frontier in privacy regulation. Neural data, broadly defined as information generated by measuring activity in an individual’s central or peripheral nervous system, can reveal thoughts, emotions, cognitive states, or decision-making patterns. This sensitivity far exceeds traditional biometrics, raising profound risks of mental privacy invasion, behavioral manipulation, discrimination, or exploitation.

As Chief Privacy Officers (CPOs) and Data Protection Officers (DPOs) at tech, health, AI, and consumer device companies, you face mounting compliance pressures. States are leading where federal action lags, creating a patchwork that demands proactive data mapping, consent frameworks, and risk assessments. Captain Compliance, as an industry-leading privacy software platform, empowers teams to automate these processes—streamlining neural data inventories, consent tracking, and cross-state compliance monitoring to reduce exposure in this emerging domain.

Timeline of Key U.S. Neural Data Privacy Developments

Here is a chronological overview of major milestones:

• 2024: Colorado pioneers with HB 1058 (signed May 2024, effective August 6, 2024), classifying neural data as sensitive personal information under the Colorado Privacy Act (CPA). It requires opt-in consent for collection/processing when used to identify individuals.
• Early 2025: California amends the CCPA via AB 1008 and SB 1223 (effective January 1, 2025), defining neural data broadly as information from central or peripheral nervous system activity (not inferred from non-neural sources) and treating it as sensitive personal information.
• May 2025: Montana enacts SB 163 (signed May 2025, effective October 2025), amending its Genetic Information Privacy Act to include “neurotechnology data” with protections akin to genetic data.
• June 2025: Connecticut passes SB 1295 (signed June 2025, most provisions effective July 1, 2026), expanding its Data Privacy Act to cover neural data as sensitive (limited to central nervous system in some contexts).
• September 2025: Federal MIND Act (S.2925) introduced by Sens. Schumer, Cantwell, and Markey; directs FTC to study neural data governance, identify gaps (e.g., HIPAA limitations), and recommend protections. As of January 2026, the bill remains introduced and referred to the Senate Commerce, Science, and Transportation Committee with no further action—prospects remain uncertain.
• 2025–2026: Additional expansions include Minnesota amending its Consumer Data Privacy Act (effective July 31, 2025) to add neural data to sensitive categories in some contexts. California clarifies neural data definitions in new CCPA regulations (effective January 1, 2026). Connecticut’s amendments fully add neural data to sensitive data (effective July 1, 2026). No major new standalone neural data laws in early 2026, but 20+ comprehensive state privacy laws now in effect, with neural data increasingly folded into sensitive categories amid broader trends such as expanded protections for precise geolocation, biometrics, and minors’ data.

This timeline illustrates accelerating state momentum in 2024–2025, followed by implementation and refinement in 2026, as focus shifts to enforcement, risk assessments, and potential federal guidance.

Neural Data Flow and Compliance Touchpoints

Here is a simplified text-based diagram of typical neural data flows in a consumer neurotech product (e.g., a wearable EEG headset) and key compliance intervention points:

User Device (EEG Headset / Implant)
   ↓ (Raw signals collected)
Neural Signals → Processed Data (e.g., focus levels, sleep patterns, inferred emotions)
   ↓
On-Device Processing / Edge AI (minimal data export for privacy)
   ↓ OR → Cloud Upload (for analytics/training)
Personal Neural Data Stored/Processed
   ├── Consent Check (Opt-in required in CO/MT for collection/use)
   ├── Data Mapping (Inventory: source, purpose, retention, sharing)
   ├── Sensitive Category Flag (Triggers under CPA, CCPA, etc.)
   ├── Risk Assessment (Potential for inference of thoughts/behavior)
   ↓
Sharing/Disclosure
   ├── Third-Party Transfer → Opt-out/Opt-in consent (varies by state)
   ├── Sale/Monetization → Prohibited without explicit consent in many cases
   └── Inference/Profiling → Restrictions if creating derived insights
   ↓
User Rights Exercise
   ├── Access/Delete/Port (CCPA-style rights apply)
   └── Correction/Objection (Emerging in some states)
   ↓
Compliance Tools (e.g., Captain Compliance)
   - Automate consent records & revocation
   - Map data flows across states
   - Flag neural data for enhanced protections
   - Generate audit-ready reports

This flow highlights vulnerabilities: raw signals become highly sensitive once processed. Businesses must treat neural data as “sensitive” from collection onward.

Risks for Privacy Officers

The core risks stem from neural data’s intimacy:

• Mental Privacy Erosion — Data could infer undisclosed thoughts, biases, or conditions, enabling unauthorized profiling or neuromarketing.
• Manipulation & Exploitation — Potential for behavior influence (e.g., addictive app features based on neural feedback).
• Discrimination — Employers or insurers inferring cognitive traits.
• Security Breaches — Unlike passwords, neural data can’t be “changed” if compromised.
• Patchwork Compliance — Definitions vary: Colorado/Montana/California include peripheral nervous system (e.g., wearables); Connecticut focuses on central. Consent models differ—opt-in in Colorado for identification uses; opt-out in California for some inferences.

HIPAA offers limited cover for medical devices, leaving consumer neurotech exposed. Industry critiques highlight innovation stifling from overbroad rules, but inaction risks enforcement actions or reputational harm.

Practical Compliance Steps for Businesses

To mitigate risks, prioritize these actionable steps:

1. Conduct Data Mapping & Inventory
   Identify all neural data touchpoints: collection devices, processing pipelines, storage, and sharing. Use tools like Captain Compliance to automate discovery and classification as “sensitive.” Map against state definitions—e.g., flag peripheral vs. central nervous system data.
2. Implement Robust Consent Models
   – Adopt granular, opt-in consent for collection/processing (strongest in Colorado/Montana).
   – Provide clear notices: Explain what neural data reveals (e.g., “focus levels derived from brain signals”).
   – Enable easy revocation/withdrawal. For inferences, offer opt-out where permitted (California).
   – Layer consents: Separate medical vs. consumer uses.
3. Perform Privacy Impact Assessments (PIAs)
   Evaluate risks of misuse, especially for profiling or third-party sharing. Document minimization (collect only necessary data) and pseudonymization where feasible.
4. Enhance Data Minimization & Security
   Process on-device when possible; limit cloud uploads. Implement encryption, access controls, and regular audits.
5. Monitor & Update Policies
   Review vendor contracts for neural data handling. Prepare for potential MIND Act outcomes—FTC study could spur recommendations. Track 2026 amendments (e.g., Connecticut July 1 effective date).
6. Train Teams & Build Governance
   Educate product/legal teams on neural risks. Establish cross-functional committees for emerging tech reviews.

Captain Compliance excels here: Our platform automates sensitive data tagging, consent orchestration across jurisdictions, and reporting—helping CPOs/DPOs stay ahead of patchwork rules without manual spreadsheets.

Why Proactive Action Matters

With no comprehensive federal law on the horizon and the MIND Act stalled in committee, states will likely continue amending existing frameworks. By mid-2026, expect further inclusions in sensitive data categories across more states, plus potential federal guidance if the FTC advances its study. Businesses handling neural data risk fines, litigation, or market exclusion if unprepared.

Captain Compliance positions your organization as a leader in responsible innovation—safeguarding user trust while enabling neurotech growth. Privacy officers who act now on mapping, consent, and automation will turn regulatory trends into competitive advantages.