So, in the nutshell, privacy coins belong to decentralized exchanges, they should never have anything to do with centralized exchanges where users privacy is of no value due to regulation and other reasons.
If we trace the origins of 90% of CEXs, you will find that exchange began with registration in the Seychelles, Cyprus, Cayman Islands, or any country that grants a license without strictness in the rules of money laundering, and therefore they only need to request basic data such as the user name and email to open the account, and therefore they have no problem with accepting privacy coins, with the increase in demand for the platform and its need for expansion, it will require more stringent licenses, including reducing withdrawal limits and requesting KYC from users.
So CEXs have no problem with privacy coins or KYC, but they need to adhere to those regulations, and those regulations do not like privacy coins.
In the cryptocurrency industry, things are not just as you have thought about it. Take bitcoin for instance, bitcoin is the only true decentralized coin, yet it is traded on CEXs. In this industry, everything is dependent on one another, of exchanges do not trade privacy coins, the utility will be low and have will not have impacts in the industry.
This statement is not correct, as all POW cryptos that have a significant hashrate are decentralized, as we cannot say that litecoin is centralized, for example, but Bitcoin is the most decentralized compared to all cryptocurrencies.