Most U.S. states require a licence to receive money or virtual currency from one person and send it to another. A company operating nationwide collects them one state at a time; Block's application says it holds more than fifty state money-transmitter and virtual-currency licences.
The licences regulate the transmitter, not the customer's rights in the asset, which is why the same company can describe its custody as a fifty-licence patchwork it would like to "consolidate" under one federal charter.
When a firm says it is regulated, ask by whom and for what.