[dragonwriter]

> Bitcoin and USD are not the same thing. Bitcoin exchanges need to have enough BTC to cover any accounts in BTC. They only need to have USD if they also have accounts in USD, which I suspect they don't.

If they are going to function effectively as exchanges where BTC can be traded for dollars (which necessarily implies trading dollars for bitcoins), they have to maintain both BTC and USD denominated accounts (which is why, indepedently of the treatment of BTC under applicable laws, they generally are subject to whatever the local equivalent of money service/trasnmitter laws are, because they have to maintain and distribute funds from fiat currency accounts.)