Hello? KYC means what? Know Your Customer.
That means merchants required to know who you are. That means reporting to the government.
Electronic currency on a public ledger means they can ramp up these existing laws to require e-file reporting on smaller and smaller transactions.
The NSA is mopping everything. Soon the FinCEN or DHS or... will be mopping up all transaction identities.
If you aren't whitelisted, the merchant can't accept you.
666 anyone?
Don't be so naive. These transformations move slowly enough that you boil like a frog.
take your tinfoil hat off and listen to the c-span again
the hearing said it will only affect the exchange level businesses.. meaning MTGOX,BITStamp BTC-E etc... not starbucks requesting 0.0001btc, not alpaca socks, and not your great aunt trudy who wants to convert the bitcoin you send her into fiat so she can buy some knitting needles and a cup of tea.
again only exchanges involved with converting bitcoin to fiat as part of their business.
secondly regulated businesses do not send reports daily of every transaction. they only send "suspicious" transactions to the serious crimes division of fincen, and only when there it is an absolute and categorically obvious link to serious crime.
AMLKYC is about the business doing most of the leg work of finding suspicious trades and people. leaving FINCEN to only deal with reports from businesses that are truly high risk.
EG bitstamp:
they ask for your ID, they check that your name given matches that of the bank you wish funds to go to. they then check if your on FBI most wanted list.
if all cleared they allow you to trade, classing you as low risk. bitstamp keep logs of your trades and as soon as you reach certain fiat value thresholds they may increase the risk level, EG bitstamp may look to see if any of your deposits are just 1 hop transaction from a known blackmarket. in which case they class you as high risk.
now if you dont do anything to class yourself as high risk. fincen will never know what transactions you have done, only bitstamp will.