The truth is probably somewhere in the middle, these institutions have risk of being caught off-sides due to how slow their legacy settlement systems move, and counter-party risk. Given the leverage built-in to the system this is tantamount to paper Bitcoin.

Institutional custody is a trade-off like everything else, and as sad as it is to say, most "self-custody" solutions getting shilled are much worse. Just like the privacy larps who promote all kinds of backdoored or overtly retarded things, there's lots of virtue signaling around self-custody with little technical comprehension to back it up.

Optionality is what matters. The few who self-custody keep the institutions honest for those who don't. This includes other institutions, Blackrock as mentioned above is the perfect check-and-balance on Coinbase... Fidelity on Blackrock... and so on.

Bitcoin is Numéraire, and as such all these institutions (and soon other countries) are in a Mexican standoff that keeps the supply in-check even if schmuck's like Krueger are the norm.