Kyc is actually not bad for crypto as it helps in curbing fraudulent activities on the space. However it is always necessary for those asking for kyc documents to protect these docs in the best interest of their users to avoid these documents leaking to a third party.
You seem right, it is really needed to protect a project from fraudulent! I don't see any other option that can replace it. I have no problem of giving my documents to Binance team, but I can't give my personal data to the IDAX, EXRATES exchanges, right? So, people shouldn’t hate the KYC system rather everyone need to be careful before giving data to any project!