Compliance is a legal question, not a technical one. A licensed custodian swaps your key risk for counterparty, freeze and seizure risk - one entity you can't audit. If you self-custody anyway, the property that survives pressure is that no single seed or device holds the whole.

Honest answer: I can't say whether such a law would be right, that's for voters to decide. But concretely, the difference is who holds the keys. With a licensed custodian, your coins sit in their system: they can freeze them, identity checks apply to every move, and you depend on their solvency (FTX...