This is not a bank or cryptoexchange. It's an electronic currency. Your equating of banks/cryptoexchange, which are subject to FinCen regulations on currency conversion, with electronic currency is intellectually dishonest. It's a barely concealed rhetorical sleight of hand. You know very well that the corollary here would be banning cash deposits. A private electronic currency is the electronic equivalent of cash.

>And isn't this an admission that Monero is of no real legal use?

What kind of absurd conclusion is that? There are infinite number of possible non-criminal reasons why one would want to convert one currency to another. In fact, the currency having the property of not leaking private information has no bearing on that.

>Otherwise, why would you care about cashing it out at an exchange? You could spend it on goods and services instead.

This is absolute nonsense. Why do we have USD-YEN exchanges?