The solution is simple: Don't use centralized exchanges.

I don't need to use a centralized exchange to "cash out" my bitcoin, since I can either spend it directly with merchants or trade it peer to peer just as I did when I bought it.
I don't care if centralized exchanges start demanding even more ridiculous KYC or require you to identify all your personal addresses to them. I will never use them and so they have no jurisdiction over me whatsoever. If anything, such draconian rules will just push more and more people to trade using real DEXs, not these centralized fakes like LBC and Paxful.