Repeated from earlier in the thread. I think this is closer to what will happen if they/he ever actually does it:
In this example I deposit 100 BTC in your "bank" and tie it to the USD internally by choice. Now internally you either hold the BTC or you sell them for USD on the market right away. You must do one or the other. Assume you hold the BTC and at the time I deposit the coins the price is $200 per BTC. So I have $20,000 on deposit, right? I come back a few months later and ask for my $20,000 back. But assume the price has dropped to only $100 per BTC! In order to get me my $20,000 you will need to give me 200 BTC but you only have 100! You will need to go buy 100 more BTC in order to pay me back my $20,000 you own me. This will cost you $10,000 right out of your profits!
So I conclude that in order for your system to work you will need to sell the BTC as soon as you get them - or you might go out of business very quick.
So he is forcing you into USD (or some other fiat) deposits, selling the BTC as soon as he gets them (they have no value according to him), and hopfully returning your fiat denominated deposits when you ask for them back.
In his own words: BTC is just used for transport into and out of his black bock fiat denominated system.
He does say he can pay you 4% on you fiat denominated deposits - which is better than some banks I guess.