KYC is not just an identity system to define the parties to a transaction.
It also is there so that there is traceability and to discover the source of funds and where and how they are used
When traceability of funds is available, states and tax departments can define and trace financial resources.
As the blockchain uses dramatically increases, the possibility for tax evasion also increases and international cooperation will be needed to stem tax evasion.
AML defined as anti-money laundering is often just a term to describe KYC & YB activities in an organisation.
As DeFi grows in sue worldwide, so will the need fro AML/KYC/KYB services.