Even in a well-respected fintech with responsible, talented people I’ve seen: safe deposit boxes get lost (literally no idea where in the world they actually are), go missing (the bank relocates or closes and disposes of them without notification) or become destroyed (fire, flood). I have seen industrial-grade hardware security modules spontaneously corrupt all the internal keys, happily continuing to produce “encrypted” output which can never be decrypted.

Building crypto offerings at scale that can survive the myriad unknown unknowns of real world and hardware failures that can affect both paper and hardware wallets is a really difficult problem. Not impossible, but the stakes are extreme and getting one thing wrong that leads to the loss of a cold wallet can easily lead to total ruin.

Even if “only” a hot wallet gets popped, the instantaneous and irrevocable loss of those funds needs to be offset by a comparatively large amount of operating profit.

At least with the traditional banking system there are a lot of safeguards in place.