Hi Tegan,
Its very common for kids from Lily's age and onwards to have some sort of security toy or blanket/blankie.
They will usually grow out of it within a couple of years anyway.

Aidyn has his favourite blankie, that he has been using since birth. I cut it into two, so now if I need to wash one I always have a spare. He takes it to daycare with him, and everytime he goes to bed, and sometimes he will get it out of his cot just to give it a cuddle.

IMO there is nothing wrong with it at all, and letting Lily keep using the wrap may just make the transition to her big girl bed a bit easier for her.
And you could also try what I did, by cutting it in two, so there will always be one available for her....

Or is there a particular reason why you are not wanting her to sleep with the wrap?

HTH!