Crypto owners especially who do trading occasionally or regularly in exchanges, everyone is facing two big problems
1. Compromising their privacy because these exchanges will ask your KYC at some point
2. Risking of losing fund from a hack.
Now when government agencies ask for clients details then it is worse. We really need more people to be in crypto so that we can find available people in our local area or even in the shops where people can exchange their crypto openly without losing their privacy and risking to keep their coins to a vulnerable area.
Government will find a way how to tax crypto users if they started to ask the details from exchanges. And these exchanges have no choice but turnover their clients' details or else, they will lose their business license. This will be one bottleneck of adoption, because a lot of crypto users want to avoid this hefty tax and then if the govt will start asking those info, then, people may think twice of using crypto.