That's not quite right. UTF-8 is not arbitrary length.

Officially, it's at most four bytes, of which 21 bits are usable for encoding codepoints - so that's an upper limit of 2^21 codepoints.

There is an initial byte encoding the length as a series of ones, so if you went ahead and extended the standard to simply allow more bytes, you could get up to 8 bytes, of which 48 bits would be usable.

I can see that a six-byte version with 31 data bits was previously standardised before they settled on four.

I guess you could extend it further by allowing more than one initial byte encoding the length, then it would be arbitrary length. But at that point I'm not sure if it loses its self-synchronising ability, and in any case it would be a different standard at that point.