KYC and other means are because of centralized exchanges. It is more of an option than requirement. They simply require such procedure not only for taxation but to follow what's in line with their license and to promote more sexured transaction. Again, this is just an option, there are DEX in which an investor could make use of if he's not into such procedures.
That is the compromised Bitcoin users have to give if they wanted the government to adopt Bitcoin. That is showing people that they (the government) still has the authority when it comes to finance system. As long as people wanted to connect Bitcoin to fiat currency, the government will always have a say in this since the government is the one governing fiat currency.
If we really want a non-government intervention then any transaction we made should be isolated within the Bitcoin network. One good example of this is paying goods with Bitcoin and not with Bitcoin converted into cash.