Good legal analysis.
Most money laundering is done with cash and big banks.
Most terrorism finance comes from governments (including Western ones because of stupidity). I know this because I spent a couple of years using the law to go after terror finance.
The justifications for KYC are extremely weak - it is just about control.
I support ShapeShift but agree that it is a big risk for a US based company or even with executives based in the USA to be leading this.