[intotheabyss]

You'd want to use a KYC'd L2 that is still secured by the L1. The consortium would just validate transactions on the L2, and the security overhead is payed for by publishing to L1, so no need for validators actually validating and retaining blocks/data. Just a single. or multiple centralized sequencers. That way you also still have access to liquidity if you want additional KYC'd financial services (like for services using USDC), while also having the benefit of a closed carefully monitored system.

[Karrot_Kream]

That's only if access to liquidity is important to you or you think you'd benefit from the infrastructure already present on an L1. I'd argue for the use case of identity verification, you don't need any of that. Bless a set of core validators run by the federal government or some other central entity contracted out to by the government. Everyone else just runs on this chain. You'll have no throughput issues because your blessed validators are the only ones gating blocks on the chain. You'll also be able to upgrade the chain and other things in a centrally coordinated manner.