On one hand, KYC can help prevent fraud, money laundering, and other illegal activities.
Technically, yes. But in the grand scheme of things, KYC does more harm than good. We couldn't count now how much platforms(inside and outside the cryptocurrency space) have been hacked and with their databases breached.
This is the biggest downside of KYC, having your data leaked and that is beyond of your control and no one know where the data goes but for the security concern, its not that safe.
Some exchanges make KYC as mandated so many have no choice but to comply though some site are still free from this, but if you want more features from CEX then filling out the KYC is a must.