Auditability Fallacy

Solvency of a Bitcoin custodian cannot be audited. An audit requires simultaneous proof of both the full amount of the asset held by a custodian and the securities issued against it. Such a process would require a halt of all transaction in both, and collective, comprehensive and secure deanonymizatiion of all securities by a trusted auditor. In the case of a national reserve this would require complete knowledge of all fiat issued against the reserve, which is infeasible and unprovable.