It sounds plausible, I’m a bit stuck on the a holder is a holder no matter where they are self custody or third party
I disagree. Those who don't own bitcoin cannot be called holders. Keep in mind that if you buy an ETF or basically even when you buy bitcoin through a middle man who ends up controlling your coins, you DO NOT own bitcoin. You are just investing with that third party.
So are they going to decrease on-chain transactions?
I don't think so because I believe at the end of the day the number of people who invest with third parties in the name of bitcoin is going to remain lower than number of people who actually buy bitcoin themselves.
I agree with you pooya87, when you dont have full privacy of your Bitcoin you dont own it. Third party may not take responsibility if anything happens, the individual will be left with nothing at the end of the day.
There are several important reasons to why self custody should be prioritized, but its more about personal goals and concerns. If you dont have access to transfer your bitcoin out whenever you want, you are not in control and dont really own your coins. Being your own bank is probably the best.
The federal government has seized assets of third party companies holding huge asset, they can do it again.