You deduced incorrectly. I'm saying that if the KYC system flags the recipient, for whatever reason, then they will likely be required to produce a passport.
This is obvious. What is your point? Nobody is arguing that KYC is a requirement of bitcoin. Let me break down exactly what I'm saying:
1. For the vast majority of people, bitcoin is impractical as a method of payment for every day needs.
2. As a result of this, most people don't want bitcoins, and instead prefer legal tender that is usable wherever they might need to spend it.
3. The most practical and least stressful method for converting bitcoins into legal tender is through an exchange.
4. Exchanges have KYC procedures.
Very simple.
You deduced incorrectly. I'm saying that if the KYC system flags the recipient, for whatever reason, then they will likely be required to produce a passport.