Hawala traders are being squeezed by regulators and Covid-19

Right. Obviously Coinbase frames it that way, but you could also view it the opposite way; the requirements of concern affect VASPs (exchanges, custodians, and so on), so sending between self-hosted wallets between individuals carries no such requirement.

The EU is drafting similar regulation. Main motivator being to comply with the new FATF "travel rule", and sprinkle in some more control when you have the occasion.

The one thing I'm really hoping does not happen would be that vendors accepting digital assets for payments (say, e-commerce site offering BTC or DAI as payment method) would be fall under such requirements.

Other than that, it could serve as a driving force towards more decentralized solutions, where no companies that could be held liable exist.