A misconception nowadays is that all cryptocurrencies are untraceable, Bitcoin is not 100% anonymous, unless you "tumble" your coins in sites that exists just for that.
There are other hundreds of crypto´s that are (thankfully) untraceable and anonymous, in a way that nobody will know how many coins you actually hold, or how many coins you just sent to your sister (thus, avoiding hacker temptations to go and steal your coins from your crypto wallet), the principle of privacy, freedom and decentralization it´s embedded on almost every cryptocoin out there, what people do or don´t do with their coins shouldn´t be a matter of interest of others.
So, I personally don´t see an issue with privacy and conducting anonymous transactions, why would anybody need to know what did I buy yesterday or where did I have dinner or whatever? Anti Money Laundering, Know Your Customer, (AML, KYC) are traditional financial institutions tools to counter attack fraud. How will Asgardia need that?
We are hopefully creating a brand new Nation, take Estonia as an example they rely their entire voting system as well as most of their government data on the blockchain, which is the very same technology that supports and maintains cryptocurrencies alive, China announced they will be interested in creating their own cryptocurrency.
That´s the bright side in crypto, almost nobody can fraud your coins, yet vulnerabilities have been found but patched right away. So traditional ugly smelly paper money will dissapear and hopefully all the interest rate fed financial institutions too.