Lets speculate what will happen with our "unhosted wallets" in the future in the US and EU

In the EU they want you to have a KYC "unhosted wallets". (They attack cold-storage, non-custodial wallets by calling them "unhosted wallets" to make it sound sinister)

Here in the Netherlands some years ago I had to make a screenshot of my wallet (really, no joke) to "prove" I own the wallet. The next step will be giving my pub-key and all BTC addresses to the government so they can't track your BTC. I'm almost certain that if you use any mixer or refuse to give your keys you will be seen as a criminal.

The USA will not be much different: The crypto Lummis-Gillibrand has just been reintroduced. With one huge difference: The part that you have the right to self-custody your own bitcoin has been removed from the bill and the bill now says that you have to be doxing your BTC wallet addresses to the government to show that it is your own wallet, so "KYC" your unhosted wallets. So non-custodial solutions will be seen as shady. A big betray from senator Lummis if you ask me.

This is also in line with the stance of the EU and the latest IMF Tax Report on bitcoin a few days ago. In this IMF report they attack unhosted BTC wallets and make a case for custodians so they can keep control. The funny thing is that they don't even try to hide it in their language. Everyone should read it, it is clear that they despise bitcoin and want to make self-custody illegal.

My prediction will be that in a few year you will have grey bitcoin in your cold-storage that can't touch exchanges. And white legal bitcoin in your custodial bank account.

I understand that KYC your self-hosted wallet in ridiculous, but I don't know what I should do when the government demands it. If I refuse it will be seen as a criminal act. I'm afraid that most people like me, that pay taxes over their BTC every year (Yes here in the EU/ Netherlands I have to pay taxes over my Bitcoin in cold-storage every year even if I'm not planning to ever sell it) So the government know I own BTC and I will be forced to give my keys to the government so they can track everything.

What is your course of action in this future?