If you coinjoin sufficiently they won’t know which UTXOs are yours, thus removing the connection between you (or anyone) and the UTXO, practically speaking. The gov or institutions can assume you have them, but they can’t easily (or at all) prove it. For all they know you sold/use the coins at a loss (which does not require reporting), gifted/donated them, or lost them.

Don’t get me wrong. KYC has all sorts of baggage, but it’s not a death sentence.