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I would just be honest about knowing about his phobia and explain to him that you are willing to accept him anyway that he is because you care about him that much but you have to make sure that you can definitely handle his phobia. Part of a relationship deals with touching whether it be during intimacy or just everyday things like saying goodbye or hello or just your average showing of affect. What I would do is really think about if you can handle not being touched and feeling wanted if you do decide to start dating. He has a severe case of touching phobia and at his age it may be hard to get over that because some people at that age are very set in their ways although with counseling to see when and why the phobia happened would do wonders in helping him have a normal and love and touching relationship it may be hard to talk him into doing so. This phobia stems from something traumatic that happened in his life that really affected him so much that as some point he started getting this phobia.
I would suggest him seeking some type of counseling to help him with this phobia and help him to be able to be touched without cringing at the thought of dancing or hugging or even holding hands with someone because that is a very very important part of relationship touching and feeling and without that it's hard to show affection and show someone that you truly care about them and want to be with them. What you have to ask yourself is, "Are you truly okay with not being touched or not being able to dance with him and show intimacy?" You may say yes I can handle that now but when the time comes to be in a relationship you may change your mind because you have no way of knowing how he feels about you because that intimacy just isn't there.