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.
Yup, having KYC always has been harm actually. With more and more projects coming to life they will start asking for KYC as mandatory step for user account verification. This is not just limited to exchangers anymore but also to the new alt projects with high throughput.
Its literally getting equal to having a bank account opening process and submitting everything to the world. One thing is sure, you cant trust exchanger and how big or secure they claim themselves it wont matter. There always be someone smarter to hack into it.