There's a big market for CSGO skins and other in-game items, which can be bought and sold. Actually, some gamers are making money out of selling their skins and games(when the prices do up). They should report their income from gaming.
If KYC policies were forced upon Steam(Valve corporation) I think that Steam would simply kick out of their platform all the games, that offer in-game items like skins, boxes, etc.(which can be bought and sold in different online marketplaces).
Personally, I don't care about the NFT market at this point. All the hype around NFTs is gone and taxing NFT holders would be another nail in the coffin for the NFT world. It's like kicking a dead horse.