that day will only come when the government fight against decentralized systems ends and of cause, I don't think it will. Kyc before now was a thing of choice on most online platforms or casino to be precise. Users loved to protect their privacy and identity and thus stayed away from any means of verifications that would expose their identity. Though privacy and anonymity was an advantage of the non kyc, but then every good side has a bad side.
It’s not about the government fighting decentralized system but rather to avoid problem dealing with money launderer which is the common issue of online services. You can use mixer services as an example for this, Their service was used by criminals freely since they don’t have KYC that’s why the government seize their business as whole in contrary if they have KYC which they can just submit the ID of the criminal who use their services(ofc this will not gonna happened since mixer promotes privacy).
KYC was already available to all type of services even before cryptocurrency was introduced. We can’t say that government is using KYC to fight decentralized system but rather to fight criminals hiding from decentralized system.
Maybe people just confused about the the government intention since they focus on other thoughts that government is killing the idea of being anonymous in crypto space. But for now what we can see that they made those actions to fight those criminals so that they cannot use any big crypto platforms for their money laundering schemes made.
If they didn't do anything with it then those criminals could successful launder money online. Especially that its easy to transfer their funds to other what those criminal think a safe destination for their dirty money.
Even in offline merchants if there's money involve in transaction KYC is being asked so much better for people to think about other positive things done by government. Since if they really want to fight decentralized system they can easily eliminate them by creating a law to ban bitcoin and any other crypto platforms running on this industry. By that they can easily eliminate this industry.