Kydex has been around for many years. Back in the 80’s it was used as a liner on the insides of ambulances due to not being porous and not absorbing things that leaked out of people and easy to clean up. It is also used for holsters due to its lower melting temp and holsters can usually be made while you wait. Kydex does not like to be cut fast it will get hot and melt. I have not cut any Kydex on my CNC but I have cut a lot of 1/4" polypropylene. Use the lowest speed setting on the router and very slow feed rates.
Here is a link to a post on the 1/4 poly I cut. Plastic on edges - #6 by avetrano
If you start at the speeds on the image you can look for any melting or material rolling up on the material. you can reduce the feed speed slower if melting material is showing up on the cut edges. If no melting is showing you can increase the feed up until melting appears and then reduce down. These increases can be adjusted while the cut is in progress and will change your feed by 10% for each click on button. Drill/machine the holes at the lowest settings. Dont over feed your 1/16" bit it will break .
Hope this helps
Anthony