Crypto being easier to steal wouldn't really change the legal obligations of a wealth management firm acting as its custodian. There can be a massive paper trail, and blockchain trail, to prove that too. I'm not sure I really see a distinction here. It's also not impossible to steal, wealth managers do it from time to time, it's embezzlement, and the banks make the person whole. It happened to my grandfather: His manager at the bank converted assets to money and took the money. They got caught, and my grandfather got his money back.
Sure, but if the theft is large enough the bank may not be able to cover it, I guess depending on the terms of their insurance. Easier to steal, to me, means higher chance of insolvency.
Imagine if a bank had a billion dollars of BTC that got stolen while prices were rising, and they had to rebuy on market to cover their liabilities. If that happened, and the public became aware, prices would shoot up as everyone tries to frontrun the bank. Wouldn't be surprising if the bank had to spend 2x+ to cover.
