What's wrong is that people's funds can be rugged. And because you don't control your funds, your transactions can also be censored or controlled. And because you don't actually hold funds, custodians can do 'fractional reserve' banking, which guarantees bank failures like our existing banking system. But unlike when normal banks fails, nobody can print more Bitcoin to bail those users out, so they will just get fucked.

Bitcoin is meant to be a liberatory P2P currency in stark contrast to the existing banking system, it stops being that if 90% of usage is custodial.