I don't see why it shouldn't be allowed.
When you make a profit you need to pay capital gain taxes, no matter if the profit is in USD, GBP, EURO, or another cryptocurrency. Bitcoin is considered property in The US, and people can exchange property for another property if they want.
But since you're talking about high volume, the story may be a bit different and you may need the money transmitting business registration.
See this story for just $56,000 on LocalBitcoins (
Michigan Man Charged for Unlawful Bitcoin Exchange) It's back in 2017 but still.
As for the KYC, the minimum is asking the name/last name and proof of residence