Why keeping money in a wallet is infinitely better than keeping cash out of banks

I hate to be one of these posts that talks about something so plainly obvious but one of the dumbest criticisms I have seen of crypto is the notion that keeping crypto out of exchanges isnt any better than keeping cash out of banks.

First of all, exchanges are not the same as banks. Crypto isn't as regulated as banks and is therefore much riskier to keep crypto on an exchange, even the big ones, as we've seen with FTX.

Second, your ability to send/receive money, stake, make transactions is not enhanced at all by a crypto bank/exchange whereas you can argue that banks give you more utility with your money.

The only reasonable reason to ever keep money on an exchange is because of gas fees, and this is a problem I hope the industry can resolve without the use of centralized services.