I can see why it would eliminate the possibility for currency exchanges, but why couldn't Bitcoin still function as a currency itself: you're just trading your "Bitcoin social status" for goods that someone else has, who in turn will trade the status they gained for other goods.

And I think a currency exchange could still exist, so long as it classified itself as "social status consulting". It would still have to report profits from the sale of status, but at least it wouldn't be a target of laws and regulations for competing with the national currency.