You make good points, this by itself is not sufficient. That doesn't mean it's not useful, though. For Centralized Exchange you need additional regulation to en

You make good points, this by itself is not sufficient. That doesn't mean it's not useful, though. For Centralized Exchange you need additional regulation to ensure that level of customer protection. And yet, regulation itself is not enough, as you can still defraud in a regulated entity. You need that the weight of criminal punishment is hard enough to disincentivize it. And you possibly need insurance (FDIC and equivalents) too. Hence why proponents argue to do things on-chain, where we have built-in guarantees and this issue disappears entirely.