I personally don't mind KYC, because I realize I've done KYC on many sites (not only gambling sites but also exchanges and others) lol. but there are still many other users who are skeptical about KYC for various reasons, I think because your goal is to require KYC to be good then you don't need to change the obligation, but to apply KYC based on level, I think it can be considered.
Governments will request KYC on big platforms and companies have to enforce KYC on customers.
It is not too bad if you do KYC on big platforms with good reputation. They can leak your data and we can not be sure about because even Big Tech giants like Google, Facebook can sell user data in the past. They can repeat it in future.
It is more risky to KYC on newborn companies because they have less reasons to secure user data and have no or less reputation to protect for their companies.