You're right, its exactly the same as any other exchange issuing a shitcoin IOU for Bitcoin...

an exchange would be infinitely more secure though because the bigger ones use actual multisig setups and have various stakeholders. You have to trust a Fedimint has the guardians it claims to.

I also don't think Fedimints can even say they're offering multisig security until FROST signatures are available. Guardians can only rat on each other, which just as in fiat land they are disincentivized to do.

Internal mint transactions are more private than the alternative of just an SQL database, but that encourages even larger custodians which paradoxically hurt privacy on the overall network.

SQL is better privacy and scaling tech because it encourages family-level custodianship.

SQL doesn't have tons of VC capital from financial institutions though, psyop'ing Bitcoiners into normalizing ECash Dollars in our stacks.