Today most of the transactions are required to fill up the KYC and this is just because they want to make sure the security of their platform who is the person making a transaction on them which would like to deposit or pull out their funds but the main problem is some of those platforms requires a valid ID which is you are giving your identity include the address, date of birth, place of birth and etc. Which can be used for identity theft but I'm not included all of the platforms but we cannot deny the risk of your personal information because of it.
Still there are some platform does not require your information just to use their services example are this wallets.
A BIG WARNING here! STAY AWAY from Binance Free Accounts! At some points, they will freeze your assets and force you to provide KYC. THis happened to me! This Exchange is not serious at all!
AFAIK they are requiring the KYC to level up your account into VIP 1 if you are one of the users would like to withdraw their funds for over 20 BTC but if you are just a normal trader want to exchange your funds and earn a small amount of profit you does not need to upgrade your account and make a KYC.