Fraudsters can also provide kyc verification for users, so I would not call it a clear indicator of the legitimacy of a startup. And for a long time I could not understand why it was necessary at all for them to submit my documents when it was not known where they would use them. But apparently it was just an attempt to deceive investors and show themselves as a real ICO project, and not a scam
All the concerned parties in an ICO that has the KYC process have a better chance of receiving recognition from banks and other financial institutions. The ICOs are also more likely to follow the anti-money laundering regulations.