I understand limiting the wild Pokemon/trainers/gym leaders etc to Kanto Pokemon. The game is based in Kanto after all.
I don’t understand how stopping the player of the game from transferring their Pokemon from a different region is a good thing though.
If you only want to play with Kanto Pokemon you could just… do that.
If you want to play as trainer from a different region exploring Kanto you could transfer your Hoenn Hoes from your other cartridge and play that way. (and/or have a mix of Pokemon from both regions. )
Seems like a win/win to me.