[Ruphin]

Making it illegal to have Bitcoin is not very easy.

What you call a "self-hosted bitcoin wallet" is just knowing some combination of bits that happens to be the private key that gives you the ability to sign transactions for some Bitcoin. How do you make it illegal to know something? What if I tell you my private key, does that mean you are then suddenly violating payments laws? What if you stumble upon it by accident?

Technically any string of 32 bytes is a valid private key that can hold Bitcoin. There just might not be any Bitcoin in the address associated with it at this time. What if I "know" a random string of 32 bytes, am I then suddenly in violation of laws when someone randomly deposits Bitcoin to the corresponding address?

The legal difficulty is that the action of having or holding Bitcoin (or mostly any cryptocurrency) is something that has no physical representation and is purely information based.

Mining or making transactions is a different story altogether. These require, amongst other things, that you send specific digital information across the internet which is certainly something that can be made illegal.