If you lose your private key or leak it you don't go to the government to get it back you just pay some money to have a second key issued and the original declared to be invalid.
All debt assigned to the original public part of the key pair would be transferred to the new one unless you could show that it is fraudulent much like you would if your debit card number was stolen.
Additionally the private key shouldn't ever be shared it should be stored on a physical device and proof of having the public key ought to be the only thing transmitted.
Its true that there are logistical challenges involved but they are the boring and tedious kind. Work that nobody wants to do.
Why would people store the majority of their cryptocurrency on an exchange?
Besides, a leak can happen without a big centralized repository - a flaw in the software used to generate and locally store these keys could be exploited, or a flaw in the generation algorithm itself, or any of a number of things.
> Its true that there are logistical challenges involved but they are the boring and tedious kind. Work that nobody wants to do.
I think that was part of s73ver_'s point, and what coding123 completely glossed over.