Hihi, let's hear from the guy himself:
https://twitter.com/paultang/status/1508375282712993792So the identity of unhosted wallet-holders needs identification - just like you need to identify yourself when you deposit money at the bank. And we want authorities to be notified in case any one person receives a total of €1000 + from unhosted wallets. This is a red flag. 4/
So, in case I send 1000$ to mikeywith, I need to identify myself, he needs to do the same.
It's not about crypto services, it's about transfers between every! single person.
Oh lol. Then I wish him a good luck with non-custodial wallets. I'm pretty sure he will fail with them or at the worst case they would be somewhere outside of EU jurisdiction. Nothing can be seriously changed there.
But with custodial services there is nothing new, they all already have KYC (some of them have $ threshold and another require KYC just to use their service). Government would probably try to enforce some extra regulations but I can hardly expect anything game changing.