Probably even worse in this case. Showing up unannounced to your bank to deposit $150k in cash is going to raise multiple red flags for anybody. This looks like money laundering until proven otherwise. They might cash the funds, but they won't credit them to your account before you hand over more information, proof of source of funds, perhaps some enhanced ID checks, etc. Good luck providing "proof of funds" that your average bank would accept saying "I just sold 3 BTC in cash".

I wonder what is the best way of selling a large amount of bitcoin and getting the fiat in to the banking system without giving away KYC beyond that required for a basic bank account.

Depends on a few things.
As a rule, if you are putting it into a private account, yes they are going to look at you. If it's a commercial / business account, not so much.
Also, how "off" is it from your usual money moving. In the US they will do a SAR form since it's over 10k in cash. but if you move a lot of cash in & out of your account it probably will not go past that.
If your last 500 deposits were for $125 or less and then you drop $125,000 into your account. Red flags are going to pop up.

Also, it depends on the bank and how long you have been there. I have one account that is decades old it's amazing how much even a crappy bank like the one I have it in will help out an old time small account holder then a new larger one. Odd, but true.

Either way, it would be such a fringe case, probably would not ever happen.

-Dave