A PayPal style system might work, but it is only low-cost low-friction (the main appeal for crypto) for the transactions that occur completely within it's own ecosystem. And they don't call it a currency, so they dodge some issues there. Paypal also dodges issues of "being a bank" because funds equivalent to customer balances are actually held in real-world banks, so it's not in any way an independent currency. It doesn't "float" against anything. Libra's basket-of-currencies approach may be very stable, but automatically puts it in a very different class of financial instruments. They could abandon that and really stick to the paypal model though.
Even then, there are still many regulations for this that must be followed: It falls in a business class of "money transmitter" which requires a separate license in every state, as well as registration with the federal government. They also must follow laws like filing a CTR for transactions above $10,000, and SARs for suspicious activity. There's simply no getting around major regulations if you're providing any sort of financial services.