Making governments feel better about crypto? Sure. Making banks and businesses feel safer (and not about making the world a better place, but about keeping their licences!) about dealing with crypto-related enterprise? Absolutely.
But saving crypto? From what? People have been using and trading Bitcoin for as long as it's been around, and not because of AML enforcement, but
despite it!
Fraudsters can also provide kyc verification for users, so I would not call it a clear indicator of the legitimacy of a startup.
Other than exchanges with licences, yeah, this is my thinking actually. Someone asks me for verification and I'm suspicious. Mind thinks = you're using Bitcoin, why're you asking?