It is not a bad idea though especially if the collateral is higher compare to the loans that they ask for but I don't think the borrowers will easily to borrow if they have btc in their wallet especially if they have an easy ways in cashing it out into their local currency.

I can see only that those who will ask for loans and will provide a bitcoin collateral are those persons who have difficulty in cashing out their bitcoin into their local currency. But this news that fidelity has announce is still in favor to bitcoin lovers as this will surely help the bitcoin to spread further.