Instead of clamping on fiat on/off-ramps (Which is what we initially feared), this is a proposal to create heavy KYC types of regulations before crypto on exchanges can be withdrawn to cold wallets themselves.
Clamping down on fiat on/off ramps is somewhat easy to work around since different states and different countries all need to work in concert to allow any single nation to prevent widespread conversion between fiat and crypto.
This proposed regulation is a bit more insidious since it effectively ensures that crypto must always stay on exchanges unless heavy KYC regulations are met,
The CEO of Coinbase tweeted in more detail about other ramifications that this could have:
Probably something worth keeping an eye on.