They do this because their business (exchanges) must obey the existing laws and KYC requirements from governments, I agree. I disagree with you that they are doing this because KYC keeps things secure. It is not, exchange security has nothing related to KYC policy.

We know.
Why KYC is extremely dangerous – and useless.

KYC-exchanges don't make compensations to users if their exchanges were hacked and they wanted scam exits or no longer had enough finance for this compensation action.

The exchange graveyard can make many people fearful about CEX. Exchanges rested in peace but users who lost money could not rest in peace!
Exchange graveyard.