It’s not clear to me why the Facebook coin has to be a crypto. There’s no blockchain behind WoW gold, and people swap it all the time. All that’s needed is a trusted off-ramp into fiat for the thing to be “money.” The frictionlessness comes from the peer-to-peer transfer. Facebook can provide that on its existing software. Yes, encryption would be necessary, but why a blockchain?

I don’t get the 100% collateral idea, either. “If Facebook’s coin can scale up quickly, then people may just accept it and re-use it, rather than cashing it in.” That is how fractional reserve banking came to be, and there is no reason why a company as rich as Facebook cannot simply promise to redeem its money. A stable coin is just a digital checking account— a negotiable demand loan to an issuer that uses the float to finance its operations.

Why would Facebook pass up that opportunity? Why wouldn’t it make loans of its coin? Of course, all the regulatory trappings of a non-member bank would apply. A thing is what it does, not what it is called. A stablecoin does what a checking account does, and its issuer would be stupid not to do what bankers do, and the government would eventually regulate it as such. (I nearly said that a government would be stupid not to regulate it as such, but that alone would not imply that the government would regulate it as such.)