You're not exactly up to date with the numbers, because back in early July, US-based ETFs alone held around 1.24 million BTC, which is roughly 6%, and if you add the 3% held by Strategy and everyone else we know and don't know about, then that figure definitely exceeds 10% of the max supply.
In addition, everything held by CEXs is centralized, it can be frozen or hacked at any time, so I don't consider it safe.
Ah, yes. Just a slight miscalculation on my part. Anyways, you get the point. Governments and institutions only hold a fraction of the circulating supply. 10% is very minuscule compared to the rest of the "pie" (which is 90%).
I hope most of the BTC in circulation remains in non-custodial/self-custody wallets for the foreseeable future. It's for Bitcoin's own good. Otherwise, powerful entities would be able to manipulate prices (and possibly bribe developers) to their hearts' content. Is this what Satoshi wants? No. A lot of things can happen in the future, so better be prepared for the worse just in case.