Bitcoin doesn't give a fuck what regulations we put on it. If it ever does, we'll just use Monero.
For crypto transfers, large or small, it's a good solution indeed. But if conversion to fiat is needed, it's back to KYC/AML one way or another.
You can convert to fiat without passing KYC/AML. I mean, you could potentially find someone that gives you a briefcase full of cash fiat for your crypto no questions asked. But you have not laundered anything as you end up with an "out of the system" briefcase full of cash that you can use for your daily spending but not for making a high value purchase (real estate, lambo, stocks, etc) without laundering it first.
Crypto does not solve the laundering problem nor really helps in tax evading in a significant way.
I think finally crypto will sneak in everyday trade and begin replace fiat. So need for krypto-fiat exchange will decline. First crypto will be used to buy un-tangible commodities like webhosting. Monero can already be used for it.
https://www.reddit.com/r/Monero/comments/9kk8ar/you_can_now_buy_webhosting_with_monero/Well, problems will arise if the secret police looks account book and finds out the crypto to be used. But when the systems like file sharing, computing, AI and such will begin to buy and sell resources with other such systems, using cryptos, while they are unable to handle the momentary heavy load, there is no need to give receipts or write anything to account book. So there is no way to get busted.
And these purchases between the systems can happen millions in every second and they will ultimately be so significant for the operation of technology that it is impossible to interfere with them. Mankind just depends too much of them. Too big to fail.
Also, people could buy resources from decentralized systems by crypto. Again. No receipts no account books. No way to get busted.
One of these kind on could be a decentralized twitter or reddit. People could pay for the system to store their message for some period of time. After that the message is destroyed. The max strorage time could be one month. That is long time enough to to brake down the corrupted power of centralized twitter and such. Also, this way the storage size will not increase for ever.
Are there any of this kind of a service available?