I was with you until the last paragraph. For the part I was with you, I still don't see what problem was being solved. Home equity loans already exist, and the money created by lenders against home equity is a "stablecoin," which could be tracked on a permissioned blockchain controlled by the bank, if that were a useful idea.

My question is about this Cambrian explosion of stablecoins that seem to promise anonymity and/or trustlessness as their business proposition. Neither of those virtues seems to me of any social utility considering the complexity they introduce. Why would the system equilibrate with more than one currency per polity for which one (of those, or backed by an SDR-type basket of those) serves as the means of transport? As a user of DeFi, you may be able to answer my question: What socially useful thing can you do with any of these cryptos that you could not do with a bank-created, government-regulated crypto?

I don't understand why there is no need to wonder if the bank can "produce the assets." Is that because the holders of its stablecoins have no right to redemption? Each stablecoin issuer can't run out of its its own stablecoins, but it can run out of stability. If the coins are created against over-valued assets, then people will try to exchange those coins for something else, but there will be no takers. The market-maker stablecoin assumes a solvent sponsor. At scale, that solvency comes from assets of unproven value.

"Properly designed and robust" fiat with Federal insurance is the comparator for similar stablecoins. The question is why we should believe that a stablecoin issued against assets whose value is judged by humans is any more "well-designed and robust" than one issued by a bank. That, I assume, is why USDT is backed by USD, which, as you say, is very inefficient.

Someone either trusted or visibly solvent must guaranty that the assets behind a currency are good. Reserves are about liquidity, which is a completely different matter. The issue, ultimately, is redeemability or interoperability, and that flows from counterparties' respect for the issuer's credit, which depends on the assets behind the currencies being swapped.

I wouldn't worry about the FDIC. It doesn't use tax dollars. It uses fiat dollars. Whether taxes are collected to prevent those dollars from causing inflation is a separate question. In this regard, the crypto world seems not to have made peace with Modern Monetary Theory.