The trigger should be transaction/balance limits, and custodial wallets should tell you to either shift to non-custodial or do some egregious KYC step at a certain limit

... custodial wallets need to become deliberately painful at a certain level of usage, and they should also provide easy pathways to non-custodial at that point as an option

... which is why things like WoS's 5 BTC per transaction limit is such a huge red flag for me