They're going to be hyper, hyper paranoid about KYC stuff and as you rightly point out it could get proper messy. They may get so onerous to use that people may head back to Tether for the sake of a quiet life. I can imagine they're going to be by far the worst in terms of nosiness.
This bit stinks 'They did request that the redeemer “wait a week or so” to withdraw. They said it would be “bad for their business” to do so immediately. We interpret this to mean they didn’t want to take the loss in market capitalization. Their marketing message very much pushes the narrative that their market cap is nothing but growing.'
I just want dollars or whatever. I don't my user experience screwed with to help them look good.