IMHO, such strict regulation imposed on non-custodial crypto wallets would inevitably lead to the disappearance of the spirit of freedom brought to live by cryptos and subsequently would facilitate the task for governments to substitute cryptocurrencies with such surrogates like CBDC.
Unfortunately, yes, we cannot afford to rule out negative scenarios. However, if we are talking about the spirit of freedom, those who would voluntarily follow these ridiculous regulations would likely be the same people who don't care about the principles of bitcoin. I said "voluntarily" because it is evident for everyone that such regulations are not easy to enforce. Should we even care about people who warmly support authoritarian regimes and the restriction of the rights and freedoms of citizens?