An exchange could be a cashu mint, which is strictly an upgrade. I can't imagine the Coinbases of the world deploying such privacy-first technology though. Govts would immediately slap them down.

That's why you use the ones you trust 🤷

It's the same with exchanges. You use the ones you trust.

A cashu mint cannot rug pull you specifically or prevent you from moving your assets. An exchange can do that, per user basis.