But doing so requires individuals to maintain their own cryptocurrency wallets through a more complicated if safer process that involves generating complex passwords and sometimes buying physical hardware to keep track of crypto, as opposed to entrusting it to an exchange.
What is actually more complicated about having a hardware wallet for example compared to maintaining an account in a centralized exchange?
Don't mention about passwords. That's not even complicated. But even if it is indeed complicated to some, we all do that. It is not something that is unique or an additional exclusive feature by hardware wallets. Even centralized exchanges have passwords.
In reality, centralized exchanges are way more complicated than hardware wallets. You need to fill out forms to open an account, verify the email, submit KYC information including pictures and videos, monitors daily for updates about the status of the exchange, regularly checks your funds, etc. With a hardware wallet, you only need to set it up and then send your funds. You can forget about it right after.