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.
I agree with the above that having the government asking for customer details defies the entire purpose of crypto handlers being anonymous. It is a concerning matter indeed, and one which I'm not so sure how it will play out if there will be a real push for this, consequently leaving exchanges with two options either agreeing to this and risk losing customer or losing the authority to run in that country.
It is a tough one for sure.