At least confidential transactions mitigates the effectiveness of KYC in Liquid somewhat. For custodial LN, perhaps chaumian ecash is some kind of answer.
Discussion
Yeah. I just think if they KYC you then it’s kinda pointless. Think of the privacy you get from using a credit card but also the risks when your credit card data is leaked. If liquid got hacked, all that KYC data could put you in a lot of danger.
As I understand it even the Liquid functionaries can’t see amounts and asset types in confidential transactions. If forced to KYC they could probably follow transaction graphs in ways that make CT not too useful though. They should work to have 50%+ of their functionaries in jurisdictions that don’t have extradition treaties with the US at this point if they’re serious about avoiding the KYC future.