Yes, and the proposed restrictions only apply to transactions which directly involve an exchange. You can still have an anonymous self-hosted wallet, you just can't withdraw to it directly; you have to move the funds to a verified wallet address first.
It's hardly "unworkable". There are already systems in place for verifying your own wallets; you just need to sign a message using your key to verify that the wallet is actually yours.
So far I haven't seen any proposed rules about what you can do with the crypto once it's in your wallet, so all this means is that you need to withdraw to your own wallet first before sending the funds anywhere you want.
The national ID link happens at the exchange, via the normal KYC process. You prove your identity to the exchange, and you prove that you have the private key for the wallet by signing a challenge message. That's it. The relevant proposed regulations can be found here[0] (linked from [1]):
> (29) This Regulation applies not only to transfers of crypto-assets where both the crypto-asset service provider of the originator and beneficiary are involved but also to transfers of crypto-assets to or from a distributed ledger address not linked to a crypto-asset service provider, so called “unhosted wallets”, as long as there is at least one crypto-asset service provider involved in the transfer of crypto-assets.
> (29a) In cases of a transfer of crypto-assets made from or to a distributed ledger address not linked to a crypto-asset service provider, the crypto-asset service provider will have to obtain information both on the originator and the beneficiary, usually from their customer. However, the crypto-asset service provider will have to verify the accuracy of only the information on their customer and not on the originator or beneficiary with the distributed ledger address not linked to a crypto-asset service provider.
So when a transfer is made to or from an external, non-hosted wallet the exchange is responsible for identifying the wallet's owner.
Also note this clause in the proposed text of the regulation (under Article 2 paragraph 4):
> This Regulation shall not apply to person-to-person transfer of crypto-assets as defined in Article 3(14) of this Regulation.
So transfers between two unhosted wallets are unaffected.
This regulation has been widely misreported, so don't believe everything you read, especially if it doesn't cite the actual text of the regulation.
Isn't it self-hosted anonymous wallets?