You should check the letter of your local code and all the answers will be there. In Chicago, we have to have 1 hour separation between the garage and living space, can have the equivalent of a simple wood door, but... there can only be one door and it can't be larger than 21 square feet. (I assume your local code will spec in a similar way, but may have different parameters.)
Now you are even required to insulate the basement to below the frost line (state law). It is my basement and my money to heat it or to lose heat from. Why does the government need to tell me how to handle my basement.
All of this stuff saves other people money in the long run - this is why their government imposes these restrictions on you. Better fire resistance means less public investment in fire departments and better energy efficiency means lower electric bills. Since the electric industry is regulated, all customers get the screws put to them when the company's costs go up. If the electric company needs to build a new power plant, an extra charge is added to everyone's electric bill - often before the plant is built.
If you operated your own power plant and own fire department on your land, I'm sure your municipality would be happy to give you a variance on these regulations. (There are some entities that actually take advantage of this, but they tend to be very large commercial enterprises.)