They could handle the KYC aspect of Monero coming into Coinbase the same way they do for cash and bitcoin currently, and the same way banks do. I.e. ask the owner to disclose how they acquired them, source of funds, etc.
Banks have rules about cash. Coinbase does not handle cash, only bank transfers and Bitcoin (and Ethereum).
That's a big difference. A bank could just throw up their hands and say "Can't trace the chain? Let's treat it like cash to be safe" but Coinbase can't in practice do that.
I thought all crypto currency's had already been determined to be securities, didn't they have to rule on that for tax purposes a few years ago?