People want to use crypto to be anonymous. There is absolutely no point in taking documents for wallets. People will surely use the anonymous wallets in this case. How dumb this thing feels.
Other dont want to bother to pass there KYC for the sake of anonymoty thats why theynonly choose those crypto wallets that doesnt require Ids and documents. Though under US regulations were being implemented about crypto wallets compliance with Kyc.
And other countries are also doing some changes like this too and it also somehow change the fact that bitcoin should stay anonymous but with these crypto exchanges with Kyc features, will it maintain that characteristics? It's probably not.
Even here in my country exchange wallet is regulated you need to follow their rules or your account will be blocked for that reason. I only use a wallet that ask for kyc for exchange use only in our local currency other wise I will never use it. This is an easy to convert our Bitcoin so we need to follow our government and wallet rules as long as you know you never do anything bad you can free to use that wallet. But most of the time I stored my Bitcoin in a wallet that I have the phrase for my money security.