No more incredible than the government telling you that you need liability insurance in order to drive a car. Do you think that is justifiable?
Where people have little or no choice (e.g government agencies, telecoms, internet access providers, credit agencies, etc) or where the blast radius is exceptionally wide, I do find it justifiable to mandate safety and security standards.
You can choose where to eat, but the gov still carrier out food heath and safety inspections. The reason is that it isn't easy for customers to observe these things otherwise. I think the same applies to corporate data handling & storage.
If any legislation is passed regarding data, I would prefer a broader rule that covers backup as well as interoperability/portability.
(*) From state's perspective there is still a problem: tax audits, bad if everybody avoids them by "accidental" data loss
New Zealand doesn't require car insurance, and I presume there are other countries with governments that that don't either.
I suspect most people in NZ would only have a sketchy idea of what liability is, based on learning from US TV shows.
Of course you can do backups if you are smaller, or comply with such a standard if you so wish.
Let's think what regulations does the 'free market' bastion US have on computer systems and data storage...
HIPAA, PCI DSS, CIS, SOC, FIPS, FINRA...
Those are related to _someone else's_ data handling.