So for me, this privacy feature of bitcoin is really taking us off-track than bringing us on-track where we can see organic growth among the legal merchants and users. Really sad to see!
How exactly does it negatively impact adoption though? If merchants and users were such puritans to refuse to use Bitcoin because criminals use, they also wouldn't use cash and some of the biggest banks too. The real problems that stop adoption are giant price volatility, lack of scalability, lack of regulation, complex user experience. Besides, darknet criminals have been switching to Monero for a long time already.
It shouldn't affect adoption at all. But it would be nice if there were much more legal merchants accepting bitcoin than illegal merchants. By that I don't mean the illegal merchants somehow go away, because they won't, I mean more and more legal merchants must use bitcoin as well.
A sizable percentage of bitcoin payments are to scams, giveaways and ponzis. There are also such things that take cash as payment but there are exponentially more legit merchants who take cash payments as well, and this is where bitcoin needs to get to.