But KYC generally is not required for cash transactions. Why can't we have anonymous digital transactions, as long as they are size-capped and rate-limited ? How is sending $300 through that kind of CBDC system different from me handing $300 cash to my friend ? Is it that the CBDC just wouldn't have the "friction" that cash does, so any limits are evaded easily ?

If they're anonymous, what's stopping a bad actor from creating tons of accounts to circumvent limitations?

Cash is impractical, and on and offboarding of serious sums raises questions ( you can't easily withdraw or deposit massive amounts of cash without the bank asking questions/flagging transactions, and even if you could, transporting it is cumbersome).

Is there no good way to size-cap and rate-limit anonymous accounts ? Maybe not, if the bad guys slowly build up a large mesh of accounts and use bots that use lots of different IP addresses etc.

> Why can't we have anonymous digital transactions

It makes law enforcement work.

But we have anonymous cash transactions, and somehow law enforcement still works.