Crypto exchanges can be utilized by the state or the country's central bank to be the main implementer of the regulations that they are trying to impose. Exchanges can be imposing the KYC requirements as required by a law passed for the same purpose. And crypto users and holders would have no choice but to agree otherwise it can be so hard to trade or liquidate one's virtual assets. Of course, we know that exchanges can be gathering data and those can be goldmine for a variety of reasons.