The solution you give is both simple and extremely effective; why don't people do the same as you and go looking for more trouble? We don't have to do anything, we don't have to determine who should enter the market and who shouldn't enter the market. The only thing we need to do is stay away from those toxic things, everything will be fine.
Currently, there is no other option for traders, but as long as they withdraw all their funds at the end of the business day, they are safe, don't trust exchanges and use them only when needed.
The FTX case teaches us many things, which become the basis when someone starts to seriously place assets in a safe place, from the past I only used the exchange when transacting, the rest was stored in my personal wallet. I did this long before the FTX case developed in the media, because I have an understanding that Exchange is like a halfway house and not ours, only we can protect assets, in the right way and have a certain level of security.
Even though there are many exchanges nowadays that have a good reputation and can be trusted, but for me keeping assets is much safer in my personal wallet, because we never know what will happen to the exchange in the future.