The body is very good at neutralizing foreign entities inside it. Foreign objects often become encapsulated in thick layers of connective tissue or glial cells. As can be imagined, trying to record miniscule electrical signals through a thick layer of tissue can be nearly impossible. For this reason biocompatibility of the implants is a subject of much research.
There are several approaches being looked at to cause the body to not reject the implants. Some researchers are looking at various coatings. Some of these coatings cause the body not to recognize the object as foreign. Other coatings contain growth factors that attract neurons or axons.
Other researchers are looking at making the electrodes more bio-friendly by making them more flexible. This would help by causing less mechanical damage at the implant site, making connective tissue or glial cell build-up less likely to occur.
Furthermore, the body consists of a fairly hostile environment to metals; its salt concentration causes adverse chemical reactions. So, the electrodes must be made such that they can withstand the environment and not be degraded over time.
Plus, tissue can only with stand so much electricity and heat. Every electrode produces heat of some sort when stimulating. By keeping the stimulation frequency below tissue-specific levels, heat accumulation will not kill cells.
Also, the free ions injected by applying stimulus must have somewhere to go, or leave the body lest they accumulate and cause Bad Things to occur. This is easily overcome by using a dipolar pulse, though.
All of these, especially a combination of traits, would help decrease the signal-to-noise ratio and make recording and stimulating much easier.