A government "monitoring" or otherwise regulating an exchange doesn't care in the slightest about the users of that exchange or the safety of their coins. They don't care if the exchange has terrible security, or if they are hacked, or if they have risky business practices, or poor cash flow, or go bankrupt, or anything of that nature. They care that the exchange is collecting your KYC data so they can spy on you, and they care that the exchange is paying the relevant taxes. That's all. As I said in my earlier post in this thread, regulation or government oversight absolutely does not mean the exchange is safe.
I think it's not really "spy" on you, if they see that you are a person who doesn't have any type of criminal record, they will move on. This feels a lot like aunts and uncles on facebook that is so scared that their data will be collected, not realizing even their text message about the fact would be collected.
If you are not a criminal, give your ID, the number will be checked, and if you are clean then they would probably not even check how much money you have. Do not oversell your value, you are not important to the government if you did nothing wrong, they can't calculate 80 million people and spy on each of them, they just want to know about a select few, and we are not one of those.