That said, the problem you described is a temporary one — while not as neat as the USB-A variant, there is a USB-C Yubikey Nano. https://www.yubico.com/product/yubikey-4-series/#yubikey-4c-...
Thanks for the pointer to the USB-C YubiKey Nano - it looks like a fine solution for the dongle problem.
You could purchase your own, I suppose.
I'm surprised nobody's hacked the YubiKey app into making use of the touch-bar as the YubiKey "device."
The reason yubikey doesn’t do this is that it will kill their business and product.
The difference is that if they bump into somebody or something, that dongle is likely to get broken, and it could even damage the USB-C port in the MacBook. That's not going to happen with a Nano plugged directly into a USB-A port.
I started noticing people in meetings with their new MacBook Pros and six inch cords sticking out the side, and on closer inspection, there was a YubiKey Nano plugged in at the end of the cord.
Meanwhile, the folks with ThinkPads or older MacBooks just had a Nano tucked into one of their USB-A ports like it was no big deal.
I know which I would pick.
[1] https://www.amazon.com/dp/B018Y1XXT6/