How do you ensure the ownership of the physical item is kept in line with the ownership of the NFT? Eg if the physical owner sold or gifted the item or it was stolen? It seems like the NFT is likely to have incorrect information over time.
The application is B2B trading of assets between dealers, so they don't have to mess around with devaulting every time the assets change ownership, introducing risk of fraud every time.
There is also a lot of insurance involved, to answer your probably next question: if the vault loses something or an employee accidentally drives a forklift over it, the NFT holder gets paid.
It works. Pilots right now, but it works.