But unlike the fiat system, no Bitcoin is going to be printed to make people whole again.

The worst case scenario is that Bitcoin price drops for a while, like when FTX, etc imploded.

If WoS or GetAlby are running a fractional Bitcoin reserve I doubt it will have much affect. The biggest fractional reserve risk is in exchanges or custody providers such as Coinbase & Gemini. Not your keys, not your coins is a lesson to be learned many times.

Custodial spending wallets are not the risk you think they are unless a single service becomes dominant. Bitcoin is permissionless money, it will always be desirable by those who seek to steal from others.

I ain't holding no privacy shitcoin longer than I need to. I'll gladly hold a million sats in my WoS account though. I'll take the small custody risk over the certain loss of value over time.