Re: Worst of both worlds
"where is the bank or broker going to get the money from"
The open market, just like selling stocks and shares...your broker would give you a quote (based on market conditions), open a position on an exchange and execute the trade. The difference between the quote and what the market provides, are not your problem...they are the brokers problem...that is how decent brokers make money. They give you a quote, they achieve a percent or two of margin, they profit. A shitty broker charges you a fee as well, because they don't have the skills or capability to execute a profitable trade.
Some brokers may decide to just buy the asset off you, because the market conditions may allow them to sell it again quickly to another customer without hitting an exchange, leading to more profit.
This is how brokers work. They have several options available to them depending on market conditions, their liquidity and their current asset portfolio. It all depends on their current overall strategy, cash in hand, asset portfolio etc.
The one thing you'll never get from a broker, is the best possible deal. With a broker, you're paying to get the job done faster and more efficiently...they are a convenience, they aren't there to secure you the best possible deal. Because for them to be able to do that, they would make no money.
It's a similar story with mortgage brokers, you don't go to a mortgage broker because you want the best possible deal, you go to a mortgage broker because it's easier and they will have knowledge about the mortgage system that you do not which makes it easier to secure a mortgage.
If you want the cheapest mortgage, and you are an uncomplicated customer, you go straight to the bank or building society.
The SBF style wild west sort of setup existed because of lack of regulation...he was able to use a dubious asset he created as collateral on loans. With proper regulation, this can't happen.
Even better, with a wallet on a proper PoW chain, you have no reason to use an exchange as your custodian for your asset. That is greatest benefit at play here...but for some reason, legions of people still leave their assets sat on the exchange...which leads to arseholes like SBF putting their hand in the cookie jar.
If you take your assets off the exchange, the exchange cannot take what they don't have...there is absolutely no reason to leave your assets on an exchange...whatsoever.
Every man + dog has been saying for years and years to not leave your assets on exchanges. We're so far down the line now with crypto that if people get fucked by an exchange, it's becoming really hard to sympathise with them.
When people come to me for advice, one of the first things I tell them is to make sure they have their own wallet set up and to never leave funds on an exchange...and yet, people still do it...it's a lesson that dates back at least as far as Mt.Gox which was 10 years ago!
Outside of regulation, the other problem we have is governments refusing to acknowledge cryptocurrency as a part of modern life. They seem to have a lot of inclination to put out threats on radio ads for crushing your car if you don't pay your road tax, and sending arseholes with clipboards to your door if your TV license isn't paid, but they haven't put out one jot of public awareness advice around cryptocurrency.
A fucking simple government radio/TV campaign advising people to not keep money / coins on an exchange would go a long way...but it would mean that the government would have to acknowledge that cryptocurrency is a thing and for some reason they are extremely coy when it comes to that.
A fucking BBC Panorama episode would go a long way as well focusing on major exchange implosions and how people could have protected themselves, rather than just hounding the c*nts that took advantage of them. If Panorama spent less time on "oh man, this guy is a fucking crook, look what he did" and more on spreading actual awareness of how to protect yourself, it would be a BBC asset...not just some show where they send a fucking idiot journalist out to follow some wanker walking his dog, who is obviously not going to say anything...because he has been fucking advised to say nothing by his lawyers.