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Never experienced anything like that, been a happy user for about half a decade.

Me neither, been using them for 15 years.

They do this for new accounts, obviously it will not affect you guys??

Maybe in the last 3 years? I didn’t have it when I registered either.

Never ran into that requirement.

I have a bare metal + several cloud instances on Hetzner.

When did they require this? I haven't used Hetzner in about 8 years, but back then, I did not need to do this, I just signed up online with a credit card.

Just a photo of ID sent digitally for me (I'm in the EU, might make a difference)

Can you opt out of that and ask for a paper contract via snail mail then?

in the US I was required to file ID by paper to start an account-- much later the project migrated, my manager apparently stopped paying the bill and it was in my personal name

I've been using them for the past 7 years, never had to provide anything on paper, but ID/company validation is required.

They asked for me to send a selfie holding my Hong Kong Identity Card but no other bureaucracy.

No, but I am sure they can accommodate fax for you.