The entire situation with centralized crypto exchanges can be summarized in one sentence.
"We can't live with them, we can't live without them."
The centralized crypto exchanges are the main way to buy Bitcoin/altcoins for "the average Joe". We can't have a massive crypto bull wave/increase of demand without the crypto exchanges. On the other hand, centralized crypto exchanges are becoming a pain in the ass, with all those horror stories of people getting scammed and losing their life savings. Is mass regulation the solution? Maybe... Maybe not....
A more strict regulation might bring new problems, like reducing the privacy of all users and making the entire crypto industry more dependent of the governments.