I have the same question

Thanks for bringing this up

Let's see what experts say

I'd like to think and hope that the approach you describe, which I'm contemplating as well, should give us what is called a "forward looking privacy"

In other words, exchanges where you bought a KYC Bitcoin, will still know when and how much you bought

And they can tell it to the tax authorities for example, to chase you for capital gains tax

Or to the dystopian government that wants to confiscate Bitcoin

However, they cannot, I hope, trace the very utxos anymore

They cannot say "I know this utxo in this address is yours"

So I think it gives a plausible deniability

You can refer to the last transaction they see on a Blockchain, the one you moved sats to lightning or liquid, and say, yes, it was me, I sold this Bitcoin

Or , yes, it was me, I moved to my lightning wallet and then I lost my phone in a boating accident

Well, at least that's my thinking

I'm not sure if I'm correct

And I hope the dystopian scenario will never happen and I hope I will find a jurisdiction with no tax on Bitcoin sale, or find a way to never sell, but borrow against Bitcoin

I want to be legal

Ok, let's see what others think