> No need for it.
That's not true since Bitcoin doesn't scale. For example, it makes absolute sense to have say 5% of your bitcoin at risk on an exchange so you can pay everywhere with a debit card (thus off-chain). However, the scarcity of Bitcoin can only be guaranteed if that exchange can prove its reserves. That's why it's important. Extremely important even, given the fact that people do store their bitcoin on exchanges whether you like it or not. Of course, paying over Lightning should be preferred over a debit card payment when possible.
I’ve always understood custodial services as an attempt by the legacy currency system to force bitcoin into their mold. Kind of like they know what the fiat system/central banking has coming to it in the future.
One thing is: some of us know better than to trust the government, especially when it comes to storing wealth. If/when the government tells the custodians to fork over the Bitcoins, the custodians will fork over the Bitcoins. This is just one of **many** things that can go wrong with allowing somebody else to hold your Bitcoins for you -- when there is no need for it in the first place.