Government institutions will try to control the keys of the citizens that will sadly get caught in their mess and I do agree that technologically illiterate people will be the first to suffer and most of them have the most money. DEXes will also be painting a target when they become popular, government does not want someone that is hurting their cashflow in anyway.
Decentralized systems will obviously get better, but it is also not changing anything from not tech savy people neither.
Think about it this way, there are people with 14 billion dollars total that gave their money to grayscale so they could invest into bitcoin for them. That is the ultimate level, sure we use centralized exchanges and our money doesn't even belong to us and wallets keys are at exchanges and that is very risky, and we consider THAT risky, these guys literally gave their money to someone else to buy bitcoin for them, they do not even hold the bitcoins nor the money, someone else just says "I got your money don't worry" to them and that it, we can at least withdraw out bitcoins to our own wallets if we want to. So long story short we are not really going to see too many people use DEX and governments will get away with it for sure.