I never stated that he'd hold or not hold BTC. I just showed how he takes BTC, and accounts for it on his ledger, then how he pays (scams) you back in BTC. His risk is very low, his customer risks are very high.
As another example, about 2 months ago BTC was worth about $25. If you deposited 1 BTC with him back then, your ledger would show $25. Withdrawing today would get you 0.176 BTC before he takes his "fee".
No thanks, I'll hold my BTC today so that tomorrow it's still a BTC.
If he's not holding the deposits in Bitcoin he would need to buy the equivalent value in Bitcoin back to fulfill the value on the ledger. The 1 BTC you deposit with him will be converted into some sort of asset. His ability to pay interest, or even back his deposits depends solely on what assets his 'bank' owns. He's essentially taking bitcoin, converting it to non-bitcoin currency and investing it in commodities, then selling those commodities, using what he made selling those commodities to buy bitcoin which he then gives back to you.
Except, he's stated that he's not going to be investing anyone's money in commodities, he's going to invest the fees. So his operating capital is a small percentage of the value on his ledger; he will have to make far more than 4% on those transaction fees to cover the ledger value.
There we go. We are starting to think about the margins. Now, reduce costs, decentralize, and even though there may be thin margins, it's about the breadth of the waters being sailed. The balancing is delicate. But once it's gotten to a point of Neutrality it will swim for the next 150 years or more.
Bitcoin is a "Present Value" currency, with an inability to carry and hold it's value. Like a dwindling gold mine, or the good old gold rushes. But the mine will run dry. The cost will vastly increase, and it no longer service as daily use purpose.
However, as payment clearing system and transaction system Bitcoin is nearly flawless.