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But insurance will never cover the value of all the assets. Custody with insurance is a scam
Not saying you're wrong or right. Just wondering why you state this as a fact.
Well if done like bank accounts it would have a limit of 250,000 usd value.
But you would get that. I would argue it is better than btc in a wallet. If they set it up like a bank setups up a cash account.
And the key here is they'll be paying interest to hodl our precious coins. It's a win-win.
What’s to stop banks from running fractional reserve practices on our Bitcoin and putting us back in the same shithole Bitcoin was designed to get us out of?
This is actually two questions at once;
1. will they make fractional reserve bitcoins?
2. will they make fractional "something" that would be based on the underlying bitcoin, but "pyramid" on it?
I think #2 is much more likelier than #1 just because you don't need to do 31 as you can simply do the second option if the desired effect is "pyramiding".