I am surprised that wallet want to involve in address ownership proof protocol, is it hard than individual to give their address to the exchange they are using? Noncustodial wallet should remain noncustodial wallet. What I see about this is a marketing strategy for trezor for people in the country to buy their hardware wallet, or may be trends or what is currently going on in the country but trezor should not have done anything.

I'm not a specialist but I see two things

Yes of course sadly it can be generalized. I could see in the future if you withdraw or used your coin to an address you do not own or that is not KYC that you get blacklisted and or your exchange account would be frozen.

Also it looks like the State (does not matter the country) want to micromanage and know it all even for trivial amount of money like 1000$ in this case or the 600$ mandatory reporting to IRS in the US. People do not realize but what they are doing now can be totally fine and legal and from one day to the other becoming illegal. This could put you on the wrong side of the fence even if you personally did not change.

Snowden in his book had a good point. Law are not supposed to make the state efficient. It should be as inefficient as possible. For instance requiring a warrant ensure you can't just go randomly inside someone's home, but you need reasonable proof of suspicion of wrong doing. We are moving to a society were you are no longer innocent until proven otherwise but you have to actively KYC, etc to prove you are not a criminal. This is backward and is seriously harming human freedom.

You can also imagine be prevented to get out of a country just because you have some money in bitcoin since you could escape and go potentially anywhere.

We keep coming back to the fact that centralization and decentralization do not mix well with each other. When you try to use centralized exchanges with decentralized bitcoin, that is what you get! A lot of invasive and restrictive measures. That goes with any other centralization, like using a centralized payment processor to send/receive bitcoin.

For example this news does not affect me at all since I'm not using any centralized exchanges and my wallet doesn't come from a centralized company!

 I wish it was only for Switzerland, but sadly it looks like there other countries such has the Netherlands, Singapore and many more are thinking implement it. You can be sure if it is "accepted" as the norm it will be done by many more countries.

From their own website: https://www.21analytics.ch/travel-rule-regulations/

Already set:

* Canada
* Germany
* Gibraltar
* Singapore
* Switzerland

Planned soon:
* Japan
* Lichtenstein
* New Zealand
* South Korea
* UK

this is not about trezor asking for your real life ID. its not about putting anything identifiable into a bitcoin transaction/blockchain.
its about a wallet that signs using a keypair which they want the withdrawal to go to, signing a 'session token' that the exchange gives to the exchange logged in users so that the exchange can see the person (logged in) requesting the withdrawal owns the address the withdrawal is going to
..
the way it works is exchanges with this scheme implemented has a API call where a wallet talks to the exchange on a different protocol from the bitcoin network to send the exchange a message that include a bitcoin address and a signature(signing for a message that includes the session token of the exchange login).

for emphasis, this is not adding anything special into a blockchain transaction.. its all done at API level (secret messages between peered software connections)

(the pro)
that way an exchange knows that the person getting the withdrawal is the person that logged into the exchange to make the request.

(the con)
ofcourse associating exchange login session via a token with a withdrawal address via these api messages means the exchange knows a little more about you. because inside the exchange they do ask for your ID when doing market orders. and so they can associate a real life ID to the withdrawal address.
but then again they kinda already did assume this.

(the pro)
it does not reveal anything outside of the exchange-wallet secret peer connection. meaning its not showing any ID in the bitcoin transaction itself

(pro)
you are then free once you get your withdraw to your local wallet to spend it to anyone you please and to move it to any wallet you please that does not do these api calls
it seems more of a protection to ensure only logged in users gets the withdrawal, or where an exchange is doing arbitrage an exchange-exchange can identify each other and share data (at API call level) not at bitcoin transaction level.

(con)
it seems more like posturing to pretend its extra security and only the withdraw requester(logged in user) gets the withdraw. but we all know hackers can play silly games, especially if they had access to the log-in details.

(con)
exchanges that implement this means that users have more of a headache when trying to withdraw as they need to prove the withdrawal address is that of the user logged in that is requesting the withdrawal.

(con)
hackers getting access to someones log-in can still ask for a withdrawal and sign the 'session token' to say they own the address for the withdrawal and know the session token for that login. thus they still can steal funds

(con)
chain analysis services where exchanges share customer data can see that if a withdrawal address is customer 'alice' and the other exchange getting a deposit has an id for 'alice' then all the taint of bitcoin transactions from the withdrawal to the deposit (inbetween on the blockchain) must also belong to alice. even if she has 'sweeped' addresses into new addresses in her local wallet

(con and pro)
if 'alice' used a mixer to sever the taint, it just appears as 'alice' using 2 separate stashes of funds.
the withdrawal association ends at the withdrawal. and the deposit association begins at the deposit
this could be wrongly seen as alice laundering. or alice having 2x the amount of assets. becasue the exchanges cannot link the 2 stashes
..
overall..
because hackers can still log-in and request a withdrawal. and then just sign a session token. its not really stopping hackers taking peoples balance.
..
because its not extra data on the bitcoin transaction its not revealing anything at the blockchain level. but is simply just making users have a headache when asking for a withdrawal.
..
users cant just withdrawal to a lambo dealership to buy a car, they need to withdraw to a local wallet and then spend the funds in the local wallet with whomever they want.
.
i dont see it as privacy invasive. as its not adding anything new to the blockchain data. and its assumed that withdrawals are associated with the logged in user anyway. i think its just posturing to meet some regulation of ensuring the withdrawal is going to a logged in user(even if a hacker is said user)

I gotta say, I didn't expect this move. Somehow, I thought the govs wouldn't go as far as to demand KYC on basically any kind of ownership of Bitcoin... Exchanges is one thing, but not being able to withdraw freely is another... Very disturbing news, and that's happening in well-developed countries, so others are likely to follow. I wonder why cash is still being ignored. People can exchange it from hands to hands freely, without any documentation and often even without limits of sums. Here's a report called "Why is cash still king" from the European Police Office (2015), and it says
It's unfair that cryptos face such strict regulations when cash is still the key to illegal activities and is barely regulated.

It's very likely in the future that everything you do will require some degree of Know Your Customer (KYC). The companies implementing it aren't always to be blamed either, since to operate legally they're required by the government to implement these sort of changes. Bitcoin will likely be battling this for as long as Bitcoin or KYC is around.

Yeah basically. The only way forward is by not using third parties at all, including those that provide hardware wallets, since they'll still be required to know some information  from the customer to sell the product to them, and for their usage, which seems to be getting more privacy invasive as time goes on.

The only way you can guarantee that you don't need to give up your privacy these days is by using your own generated offline wallet.

Yeah, cash seems to get away with a lot. However, depending on what you're exchanging for cash, you could still be required to give up some personal data. That's just how the world is going unfortunately. Like I said the only way of storing money while keeping your privacy intact would be your own generated offline wallet, but even then when it comes to spending that Bitcoin or exchanging it in all likelihood you'll have to give up some sort of personal data then. The only way around it currently is via peer to peer trading, but not everyone is looking to exchange their Bitcoin into fiat.

That's crazy! The reason is the usual:
But they still allow cash withdrawals there, right? So the entire "illegal activities" argument doesn't hold.
Didn't South Korea have one of the highest Bitcoin adoption rates in the world? Call me paranoid, but could it be they're protecting other financial interests trying to discourage the use of Bitcoin?

That makes it basically a stock broker, not Bitcoin.

its more (meant to be) about ensuring that the person logging in (presumed registered user who gave KYC to do market trades). proves he is withdrawing to his local wallet.. instead of some illicit service. thus an exchange cant be treated as being the 'source of funds or using illicit services' because a exchange is (meant to be) unable to withdraw to a mixer or foreign terrorist group/darknet market direct from the exchange. and only allow withdraws to people with control of a private key

EG silkroad deposits dont let users have the private key of the silk road deposit address so a drug addict cant withdraw straight from an exchange straight to silk road, same with mixers. the laundering customer does not have private key access to the mixer so cant withdraw from a exchange straight to a mixer.(EG in theory)

the flaw though..
when a exchange logged in user sees a 'session token' that needs to be signed by an address.. a separate illicit service offering deposits could EASILY also have a system where a user gives them the token. and the illicit service signs a message which the customer can then pass back to the exchange. thus the exchange then withdraws straight to an illicit service.

so as i said before its more like posturing to appear to be meeting some regulation. but not actually doing anything technically restricting, thus more of a gimmick that just causes more headaches for users.
it wont stop hackers and if done as just explained wont stop people withdrawing direct to illicit services technically.

ofcourse smart addicts wont want their KYC exchange session linked to a deposit address of a illicit service. so technically is possible to still withdraw to a service if the service handles message signing on behalf of a depositor. but practically a user would emotionally not want to, to preserve privacy