It's a war, they'll continue pushing to gain the control they've lost when people said no to centralization and their surveillance and we need to keep fighting to keep our rights such as privacy and control over our own money. That means if they ban no-KYC exchange and it works, that means there was something wrong with that model and we need to work on creating better decentralized exchanges that something silly as KYC doesn't even apply to them. Just like what we have with Bitcoin and nobody can say "KYC Bitcoin"! They just don't mix since they are in contradiction.
They can ask citizens to submit more information for taxation like which Bitcoin addresses one person has for a taxation report annually. It's kind of KYC but governments have to rely on citizen obeyment on that policy. While the fact is challenging for governments, with Bitcoin HD wallets, people can easily get many addresses in a same wallet, and they also can easily to create different wallets for using too.
KYC Bitcoin is never an easy regulatory target for any government with any purpose like Taxation specifically. It's because Bitcoin was designed by Satoshi Nakamoto to give people who use Bitcoin with non custodial wallets their own Bitcoin banks. Governments only know which Bitcoin addresses you control if you tell them, it's not like bank accounts which are fully know and controlled by governments.
I've written this a number of times over the years--most people aren't looking for an alternative to fiat; cards, phones, and plain old cash work just fine 99.9% of the time as long as your country's currency is stable. Assuming there isn't a hyperinflation crisis in your country and your government makes certain things illegal (like no-KYC exchanges, etc.), just how many people do you think are going to be willing to become criminals so that they can own/use a form of money that they have to purchase first with fiat that they could have just spent in place of crypto in the first place?
How many people are even willing to perform an act of civil disobedience because they believe a law they're potentially going to break could lead to prison time? Gotta say, I don't think there's going to be a huge groundswell of support for crypto if legislation suddenly goes against it. A hardcore few perhaps, but the average person? Nope.
It's hard for newbies to get privacy with Bitcoin as Bitcoin is not a private coin like Monero and people can achieve privacy if they have enough knowledge for using Bitcoin this way of protecting their privacy.
With most people, they don't truly care about privacy and they join Bitcoin market by smelling opportunities of getting richer, improving their wealth. Privacy does not exist in their priority list or it is not at top of priorities.
What people think about privacy is not important with Bitcoin, as Bitcoin is Bitcoin, privacy is privacy and must be protected by people, not by Bitcoin that is unchanged while people can change their knowledge and practice.
Why KYC is extremely dangerous – and uselessBitcoin privacy guide.