Actually the article mention " select crypto" but not the BTC.
And to be honest I do not see the point for them to support a decentralised currency like. just complying with the regulatory rules ( KYC, anti Money laundering,etc...) Would be a real nightmare
In practice, share lending is backed by (over)colateralization ( e.g cash or highly liquid short term debt).
The worst case for you would be to receive cash instead of the he stock itself.though this doesn't give relief to the broker not to fulfill its obligations.
I believe the deflation virtue described above refers to the capacity to a business in democratising a product or service that used to be expensive.
The growth here ( typical example is Uber) of the company called mes with a deflation of the price.