For one thing, it's a breach of privacy. What's next, AML reporting every time someone spends $100? Where does it end?
That's where it ends, yes. 10-15k USD/EUR used to be the transaction limits triggering more paperwork (and that was when the money was worth more), now in the cryptocurrency realm the figure is often ~1000 EUR/USD. Next stop is even lower, in Greece cash transactions are limited to 500 EUR.
For another thing, data security is a major problem. Major companies are compromised everyday, losing customer data left and right. The more companies that have your KYC data, the more likely you are to have your data breached and your identity stolen. I know someone who had their identity stolen. He's been struggling with the fallout for several years now. His credit was ruined because of it. I would never wish that on anybody.
Regulator's dgaf about this, the ends justify the means to them.