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Same thing Facebook has been doing since forever?
I was going to say the same.

Had a couple of accounts I made under a fake name get locked out unless I provided government ID.

Do companies such as instagram and websites with KYC requirements actually parse/save the data in the photo and look you up in a government database when you send your ID or does a random human just stare at your photo and make a judgement call like a bouncer? In either case, it's frightening that that is how it works.
An ID scan seems like a rather simple thing to fake...
Excepting a successful cryptocoin, and to a degree even with - is there a way to run a serious business without requiring government-issued ID? I simply cannot do business with an entity I don't believe is subject to any common law.

That ID needn't be direct - credit cards essentially provide reflected ID, since last time I checked I needed some proof of being a citizen or registered corp (more reflected ID?) to get one.

I can't help but be a little critical of libertarianism here", and that "Government-issued ID is evil" just means we're used bodged government-issued ID, because the business drivers for requiring government-issued ID at all levels are overwhelming. The battleground should be what reflected identity providers, like credit issuers, are required to disclose.