It’s about controlling risk. Think of 2007/2008 bank collapse when they played with fire and were leveraged 30 to 1.
Even if I grant the analogy, their original proposition is accurate. Regulations are the main reason why US exchanges are an incredibly small percentage of total crypto volume.
Do you have a way to protect one customer's funds when another customer is ruined?
As far as mechanisms there's auto deleveraging and insurance fund.
Professional traders all wish to be on exchanges with high leverage because it means more volume is uninformed flow and therefore there is more alpha on the table. The pie is bigger.