To that point...
In some ways Monero is no different than physical cash. You deposit it at the bank, they have a record. You withdraw it... they have a record. In the same way you buy Monero at Coinbase. they have a record. You sell it, they have a record. Deposit it... they have a record, withdraw it... they have a record. They follow their AML/KYC stuff and they know what they need to know about their customer.
The differences are this. Did your Monero come from a Poker site? No one knows. Coinbase doesn't know. So there is no need to blacklist it. I don't think Coinbase really wants to have to be the police. They want to be an on/offramp for crypto.
Coinbase would be crazy not to want to support fungible crypto. It would make their lives lots easier.
And it leaves the police work to the police.
Okay, I see where it would be useful to have on coinbase. I was thinking of it from more of a wallet standpoint, not a place to buy and then send elsewhere, I was wrong.
Still though, the anonymity of Monero is its biggest selling point and the
only reason its more fungible than Bitcoin. If it weren't for anonymity then Monero would just be another useless altcoin. The big focus IS on anonymity -- some people use that anonymity for fungiblility (like me), others for committing crime. What you choose to use the anonymity for is up to you, but regardless of why you use it the main point is to have an untraceable currency.
Remember, as soon as it is off of Coinbase and in your wallet it can't be traced. You always need an on and off ramp to and from fiat if you're going to transact in fiat and that applies to any crypto. The only way that doesn't apply is when you mine it yourself and if you buy and sell items directly without any conversion to fiat, right?