Imagine that 60% of Ireland's population (The current population of Ireland is 5 million people) is registered and KYC verified on Coinbase and one day there is a data breach, boom, KYC documents of 60% of Irish people is publicly available. Isn't that a national security threat?
A nation-state level attack does not need the identity of 60% of the population - the identity of a small handful of the right people is more than enough to pose a national security threat. The protections against such an attack are from the final destination not being fooled by the false identity - it is already
far too late to prevent the leakage of KYC data. But the vast majority of attacks are not from nation-states looking to compromise national security, but from individuals looking to take out $200,000 in your name.
I already mentioned in another topic that,
according to Britannica, in 2021 alone, 42 million Americans (more than 12.5% of the country's population) were victims of identity theft, the total loss was then $52 billion.
That matches the data I shared in this post:
https://bitcointalk.org/index.php?topic=5452900.msg62337285#msg62337285