Not going to happen.

The digital financial system is too big a stick in terms of political soft power for any government to willingly give up on principle. Any concession thereof will also be used as the basis for black market/illegal transactions/tax evasion purposes.

AML/KYC exists as it does for a reason, and it isn't going away any time soon I'm afraid. I've worked in the industry for far too long to even entertain a fantasy that a system as you describe could ever work. Once you try to encapsulate any financial transaction processing capability with the wrapper of a business, you have to extract operating cost from the financial activity you are facilitating to at least fund a compliance/legal/risk department as your organization has become the lever with which the government enacts accountability for the transactions you're processing.

The only way around that is to drop a fully functional banking suite in every user's hands, which in a fractional reserve based economy comes with it's own problems. (I.e. What do you mean I can't declare myself a billionaire?)

The entire financial system is such a house of cards it simply wouldn't be able to survive a true democratization of the capability to transfer money. It wouldn't be feasible to regulate, and no one would want to be left holding the responsibility bag for the higher risk financial traffic. The level of oversight of every last citizen, if actually attempted would quickly result in excessive chafing as people who aren't even guaranteed to know how to file their taxes now need to figure out how to meet the big boys regulatory burden. No exceptions. Not exercising your capability for monetary transfer either wouldn't necessarily be a guard against regulatory issues, since that would be indistinguishable from someone not reporting.

The level of crash and burn once people realize that the entire system only works because there are such high barriers to entry would be entertaining though.

Then again, maybe I'm just jaded from being in there for so long. Maybe people would realize that the line they've been fed to put all their money in 401k's which serve as investment vehicles to further entrench established players (who were paying that wage in the first place) does nothing but perpetuate the business cycle, and exclude new market entrants due to hyper optimization.

Maybe financial literacy and community spirit would bloom, and entire communities would come together to pool cash to maintain their own infrastructure, and to take care of their own without exploitative behavior becoming the norm.

Maybe starting and growing a local business would become a more attractive venture, deconsolidating the market and turning the dial back on the too big to fail Hobbesian monoliths we're surrounded by today; engines of fundamental income inequality looking to extract the most while minimizing liabilities; ensuring that wages only barely appropriate to keep people coming back to work get paid to ensure that shareholders are getting what they paid for, even if by doing so, it destabilizes life for those who can't afford to buy in and handle the chaos of meeting the challenges of pay-check-to-paycheck life.

Who knows?