Those "stores" are the casas de cambio. They are legal. Don't go there, unless you like losing lots of your hard earned money. Didn't you notice that they give you less than half of what Western Union gives you? You really, really don't want to go there. Don't use an ATM with your USA credit or debit card, either.
Nobody is going to get rid of the street vendors. And you don't want them to. If for some reason you can't use Western Union, you want to go to them. Even the very worst of them will give you double what those "stores" are giving you. And you won't have to be bothered with any government paperwork. When you go to them, bring new, crisp 100 dollar bills if you have them. Nobody here wants bills that aren't new and nobody wants less than hundreds, though they'll probably take them for a lower price. And if possible, don't carry too much cash at one time.