I generally agree with the subject you bring up that at the end of the day CEX is still useful and people should learn to use it with more caution (at least until better solutions are found and DEXes are improved more) but I don't see the following happening:
Government are going to strengthen the regulation of centralise and there will be more transparency from the exchange to their customers, especially with regards to custody of customers assets and proof of reserves .
There are two problems with this.
1. Even if the exchange has revenues (which they all have) it still doesn't guarantee they won't get hacked or scam their users and run away. So the said proof doesn't solve any thing.
2. Governments don't regulate exchanges to save users. They do it to save themselves! They want full control and surveillance and more importantly taxes, all of which is possible if the CEX enforces KYC and reports all their user activities to the authorities. Majority of the exchanges that have been hacked over the past couple of years were regulated and that didn't change a thing!
Apart from the from this issues CEX has really helped in increasing bitcoin and crypto investors because
To be fair we don't want bitcoin investors we want more bitcoin users to help the ecosystem as the only decentralized payment system. The altcoin investors are also simple gamblers who do more harm than good.