Custodial wallets have an reputation issue. Only way to not being labeled as scam or rugpull-waiting-to-happen, is to activelly push and help your (selected) users to custody their own coins. Also - its better for edge cases such as user dying. Removes the huge burden of responsibility from the custodial.

But it has to be done well. Usualy exchange just lets you withdraw and thats it, your problem now. I think it can be done better. For example what BullBitcoin is doing.