Would this make banks responsible for uncontrollable losses? This will be great for adoption and hints at a future where banks essentially regulate smooth digital transactions and keep them secure.
only if they're holding, securing the private keys of customers and are responsible for the compromise of those private keys (for which they are ensuring security). Few losses are ever controllable.
Banks can't regulate transactions that hit blockchains which they don't control. And of course banks want to get in on this...after they spent years talking shit about cryptocurrency they now are quick to follow it...yet they still won't praise bitcoin. Want to know why? Because they can't control it.
Last, the private keys could be for anything, not necessarily currency. Private keys are a critical part of the cryptographic formula that makes transacting information across a blockchain possible.