For example, you can use the Ledger service to save the seed phrase, and there you need the kyc procedure.
I believe you are talking about the Ledger recover service, which is an optional and also a paid service, yeah it requires ID verification, but it is also an opt-in service, and i don't even recommend anyone to pay for such a service that puts their funds at risk.
But that's not the problem. In some countries, citizens are required to declare their wallets to the tax office. If the wallet is declared and the coins are stolen, you must definitely write a statement to the police in order to submit the correct tax return.
Okay, that is a valid point to report to the authorities. My point is that nobody should be using any kyc self custodial wallet, it is risky enough to submit kyc in custodial and centralized platforms.