Kruw on Nostr: That's a good point! The most likely explanation is that since a red colored ...

That's a good point! The most likely explanation is that since a red colored competitor collects their users' xpubs by default, regulators have no reason to interrupt their spying. They can just use the honeypot for surveilling red wallet users who are under the influence of a false sense of security.

Think about it this way. Say the government wanted to ban self custody, and there were two hardware wallet companies. One hardware wallet sends all the private keys to their central server by default, and the other hardware wallet generates the keys offline and never leaks them. The government has no reason to target the former because it's not an effective self custody wallet, it serves as bait for those who didn't verify the claims of sovereignty by the developers.