What would you do if FinCEN were threatening you with an enforcement action? That would probably mean millions of dollars in civil penalties. And it might be coordinated with the Justice Department, bringing criminal charges. Unlicensed money service business, money laundering.... these can carry long prison sentences. I bet that's floating around in the back of Erik's head as Shapeshift implements these changes. 
Erik is just about making money in the end, it's not a charity service he offers out of love for the crypto community. He'll do what's the best option for his business and in this case it's a measure forced upon them.I do think less people will use their service due to all this, but I also think the group of hardcore Shapeshift users will stick with it regardless of how severe the implemented measures are.
If people are okay with handing their private information over to scummy ICOs for investment purposes, they will definitely not shy away from handing over the same private information to a reputable exchanging service.