But both banks, as well as centralized exchanges, are already subject to extensive anti-money laundering and counter-terrorist financing frameworks. That cartels continue to be able to deposit illicit proceeds into the banking system, and convert them to cryptocurrency via centralized exchanges, rather appears to be a testament to the deficiencies of existing AML/CFT frameworks themselves.

It thereby should be questionable whether the imposition of AML/CFT frameworks on "unhosted wallets", as, for example, imposed by the EU via the Travel Rule, would actually stop cartels from laundering money, when cartels are already exploiting these exact same mechanisms in the financial system today.

One possible argument for the regulation of "unhosted wallets" appears to be that once funds exit the traditional financial system into non-custodial services, law enforcement may have a harder time to obtain the proceeds. However, such argumentation appears to neglect the fact cryptocurrencies, such as Tether on Tron or Ethereum, continue to be freezable, even in non-custodial wallets on the one hand, while unfreezable cryptocurrencies, such as Bitcoin, merely emulate the draining of funds back into cash.