for me, I would never do this - this would mean giving someone possession of my collectibles. I see this as the same sort of fallacy as trusting an exchange to be your wallet. It's all good till they have 10 million in physicals that they loaned out 5 million for and then they up and disappear. And that could easily happen in the crypto space. And it has happened many times. Sorry, once you give up your keys, it ceases to be your crypto. You are essentially selling your item and hoping to eventually buy it back once you pay off the loan.
I totally agree, trusting the service providers is one of the main challenges here. I can't go into detail publicly but the custodian and both the lenders I am talking to are valued at several billion dollars each and do hundreds of millions in transactions per year (one being a publicly traded company with a federal banking charter). Still very much a non zero risk but hopefully that gives some context on their scale. As a service provider they will need to make us feel very comfortable with the arrangement for me to be interested.
This is definitely not an option for everyone, I have been surprised by the level of interest so thanks to all those that reached out! Imagining a world where physical crypto can be loaned against rather than peeled or sold at/below peel value is exciting to me. Also having a trusted custodian help in brokering sales and marketing to a larger audience would be a net benefit for the community imo. I appreciate the input, I will keep you all posted!