KYC should only be on bank statement transactions not on crypto currency because it disrupt the anonymity and the ideology why crypto currency was created. There are good and bad outcome of having an kyc procedures on such exchanges or any crypto projects but it really all depends on the user whether he or she is to comply or not.
Sometimes the ideology which stand behing the crypto is failing. Cryptocurrencies are going to be used for illegal matters just as fiats are and nothing seems to change. But the problem with KYC is the fact that we live in a world where every company is getting paid for selling away your personal data for "advertisement purposes". For me KYC procedures are oftenly too strict and usually a pain in the ass, but it cleanses the entities from negative reputation. If you are a cryptocurrency exchange, you don't want to be associated with criminal activity and KYC is helping here - people aren't anonymous, so they stay away from it (i guess). There is other side of the book though, and the Binances last data leak is giving us an example why KYC might be wrong. It's very difficult to pick one side, we have to find a solution somewhere in between i think.