I agree. I just don't see how that's a defense in people's minds. It isn't any better than just giving someone total control of your Bitcoin. You're still doing that even if you have one key. You've effectively converted yourself to paper Bitcoin when you do that.

Actually a multisig does nothing here, as you can observe the address you sent the funds to, unless the lender moves the coins. I think the point Jack Mallers is making is that they DO need to move the coins to whoever is providing the local fiat loan, so your coins get mixed with other borrowers, meaning that you only end up seeing "paper" Bitcoin until your Bitcoin is returned at the conclusion of your loan.

It does absolutely nothing except maybe prove your identity if such a model was done KYC free. That's the only way you'd know for sure who owns what (as only the holder of that key could sign it). Other than that, I see multi-sig as moot. You have to give up control of your Bitcoin to get a loan. That makes sense. Holding 1/3 keys doesn't change that fact regardless of any other details. It would be retarded to give a loan against Bitcoin otherwise.