And such a stablecoin exists: https://makerdao.com/en/dai/
It uses collateral, lending and a careful incentive setup to maintain close to 1:1 parity with USD. I haven't looked into the detail, but it seems to have a decent record (of stability).
The first is censorship resistance. And I can assure you that however in the world you set up something backed by a fiat, its controlling government can step in and seize your collateral if and when it pleases and then you're screwed. But you can certainly come up with all sorts of fancy legal speak and marketing pitches to argue otherwise which makerdao is basically doing.
The second is protection from currency manipulation and stable coins solve nothing on that front, but let's assume for the sake of argumentation that people interested in stable coins are aware of that.
hmm -- the collateral in this case is ether. So, unless you feel the US govt can step in and seize all ether in the world, this statement seems unlikely to be true.
What happens if eth tanks in value? Now you'll have $0.10 of eth backing $1 worth of stablecoin. Also, if it's backed by eth, who has custody? If it's the controlling entity, they can refuse to redeem your stablecoin for eth.
1. ETH has tanked in value by basically that large of a drop since DAI has been in existence, and it's held its peg. Recently, I believe some of the parameters that control DAI's stability did cause people some concern given how high they went, but so far, DAI has been remarkably resilient.
2. I believe the ETH is locked in smart contracts, so nobody has custody (although it may be vulnerable to bugs). Not 100% sure though.
3. DAI is moving to a multi-collateral model, so it can be backed by ETH, BTC, other stable coins that are backed by fiat in various jurisdictions, other coins that are backed by gold reserves, etc. That seems like it will make the model much more resistant to the attack that was suggested above -- i.e. that a single government could interfere.
I'm highly skeptical that this actually works.
I'm also not convinced it will work forever, but it has been remarkably resilient to date, even in the presence of the value of the collateral (ETH) dropping 90+% in that time frame.
I still don't see much point given that there are now stablecoins pegged exactly to the USD with audited bank reserves.
In that sense it's like a regular bank with cash... they know their own customers but they don't know where that cash has been.
With a blockchain there is the potential for tainting coins, but you have to know that a particular address was associated with a crime.
In my view, on the privacy/censorship spectrum, a pegged stablecoin is far closer to cash overall than to PayPay or Venmo.
Regulators kind of have to either accept that reality or ban pegged stablecoins entirely. There isn't really an intermediate option. At this point it seems like the genie is already out of the bottle and they aren't like to ban them entirely.