Should the State Own the Private Keys of Its Citizens.
A crypto anarchist envisions an ideal society in which everyone manages their own private keys. If this were the case, centralized authority would transfer from middlemen to individuals.
The difficulty with this idea is that not everyone is ready, and probably never will be, for the burden of "being their own bank".
Despite the rising tendency toward self-custody, the bulk of the populace still does not take cryptocurrency seriously, and many will never wish to handle their own private keys.You've probably had the experience of teaching someone how to safely store their seed phrases, only to have them contact you months later because their phone had to be replaced, and they lost that piece of paper you told them to store ever so carefully.
Ownership by States
The trend of governments investing in cryptocurrency and then handling the keys on behalf of the populace has grown over the last several years. Although this relieves the populace of the responsibility of managing seed phrases, it also fosters a sense of confidence that the government will act in the populace's best interests.
The first nation to establish a national Bitcoin reserve was El Salvador in 2021. With a population of around 6 million people, El Salvador may be compared to a state within America, several of which have also suggested their own Bitcoin or digital asset reserves in the previous year or two.
It is impractical to expect everyone to handle their own keys, particularly in the modern environment. We will need custodians in the interim, and they should be as decentralized as possible, even though the trend toward more people handling their seed words is still growing.