There's a little bar in Cupertino, Paul & Eddie's Monta Vista Inn. They only accept cash. Should they be shut down and have their assets seized? After all, what possible reason could they have to operate as cash only, in Silicon Valley, other than that they want to destroy evidence of how they earned it?

Again, it's beside the point what they should. Small businesses have "know your customer" requirements too, and if this little bar made suspiciously much money from cash sales, the government will come looking to make sure it isn't a money laundering operation.

If you think it shouldn't be that way, you are faced with a problem. A social political problem. Which Monero does nothing to solve. Which is the point.