The point is not whether the phone number is stored encrypted on the device or not, the point is that governments/phone companies gatekeep who can get a phone number and who can’t and at what terms, therefore a phone number shouldn’t be required, as it means that a user would have to possess government ID to get a phone number in most jurisdictions, it should be based on an open and permission-less identifier, for instance a #nostr account.
The world is bigger and more complex than just one single country.
The design philosophy behind something should account for decades/centuries of changing government policies and privacy regulations/requirements, hence ditching the phone number requirement, same goes for email