It doesn't really matter as long as they don't force miners to censor non-compliant transactions. They can't stop anyone from using privacy tools, doing p2p transactions, paying to services that don't comply, etc. If you are using Bitcoin the way the cypherpunks envisioned decentralized money, then Bitcoin fulfills its goal of being decentralized money.
• They CAN start a crackdown on privacy tools for whatever boogey reason,
• They can do the same to P2P platforms and any other service that doesn't comply for the same non existent reason.
If this is allowed the cost of privacy will keep growing until those seeking it are considered to be doing something illegal.
It's just that, due to the situation and opportunity, we still can't avoid submitting our KYC because we have something that needs to be released to an exchange that is under this regulation, or else we won't be able to release our money on their exchange site platform, right?
There are a couple of non KYC compliant options that you can use.