I would expect anyone attempting to be in the finance space to be required to abide by current finance regulations, including KYC and AML. If this renders stuff like defi untenable, that's not a big loss in my book.
When you say things like "the finance space" and "Defi" what are you referring to exactly? Do you think all forms of peer-to-peer finance (including 2 people engaging in an off-exchange trade, or a micro-loan, etc.) should have AML and KYC requirements attached? Traditionally these are requirements for
businesses but not for casual users.
I'd like to think you and I could use a smart contract to engage in a trade or other financial transaction that benefited both of us, without being subjected to government mandated reporting. That's certainly possible with many other currencies and investment assets.