My 8yo got a Swiss Army knife for his birthday last year (when he was 7). We got it for him. He’s a very practical and outdoorsy child, hobbies include fishing, helping with woodwork, camping and he wants to learn to kayak based on trying it this year. We had zero qualms getting him a Swiss Army knife - he doesn’t carry it about unsupervised, but he used it under supervision when camping and fishing etc.
Your child your rules of course but I would encourage an open mind on this. We’ve never had any issue with my son missing the knife. It’s kept with my husband’s tools when not in use.
I think kids are generally much more capable than many parents give them credit for, and I also believe they often live up - or down - to your expectations.
My son has owned his own hand tools from 2.5 and a small electric screwdriver from 4, he’s allowed to use kitchen knives when cooking (under supervision by me) and he’s very trustworthy and responsible in general. I do think it’s better to expose them to these things young, under supervision and they will learn how to keep safe whereas if it’s just banned they don’t know how to handle it.
But in general, if you don’t feel a gift to your child is appropriate it’s fine to set a boundary that it needs returned and/or set boundaries about when/where they can use it. You know your kid best so your rules should go.