No matter how easy it is to do, passing a law like this has one important effect: it narrows down the set of those using non-custodial wallets to just people wi

No matter how easy it is to do, passing a law like this has one important effect: it narrows down the set of those using non-custodial wallets to just people willing to break the law to do it. That's a valuable selection effect for the government, because it means if you can find out that someone is using a non-custodial wallet, it means ~waggles eyebrows~ they probably do have something to hide. You can get a warrant to seize their stuff and figure out what's going on. Which solves the main problem the government has with cryptocurrencies -- that they can be used to easily hide illegal activity.