Begging for regulation, like SBF? Officially regulated or not, as an exchange you can still insist on a) have one of the big 4 adivise you on whether you are a bank, a broker or whatever else exists in finance b) define internal controls and processes based on a) and have c) one of the other big 4 properly audit you against b).
SBF even admitted that his insistence on regulation was just a front.
Oh I agree. Traditional centralised exchanges (CEX) are largely normal exchanges. Of all the things in the cryptocurrency space, they are one of the only things that cleanly fits into an existing box.
Binance, FTX, Coinbase, Kraken, CoinEx, etc are all just traditional financial exchanges and should be forced to comply with existing regulations because they can. They can do traditional KYC and AML in addition to the controls you mentioned because they are centralised services that directly interact with traditional financial services (banking, wire transfer, etc) The only real open question for those services is asset classification.
If those services wanted to comply with regulations, they could do so voluntarily but they aren't actually interested in that like you mentioned.
The issue is that any time regulations come around, they end up misclassifying the network and decentralised projects in the process.
TLDR: Agreed on all accounts with regards to centralised exchanges. My main complaint is that so far the suggested regulations have not fit well onto the rest of the space.
I guess this might be a nitpick, but I don't think most cryptocurrency exchanges do function like "traditional financial exchanges." They seem to operate more like a combination of exchange and brokerage.
I'm not an expert but I don't think "traditional financial exchanges" hold assets to be traded on behalf of customers. I think they are just meeting points for traders, and they host the public order book.
SBF even admitted that his insistence on regulation was just a front.