There is nothing stopping a government from doing that. Anyone with the choice to receive 10 BTC or a 10 BTC fractional reserve-backed note may, however, have a strong preference for the 10 BTC due to a lack of trust of the reserve institution.
Within regulation, you can refuse goods and services to anyone. However, as far as I know, if someone owes you money they can always pay you in an equivalent amount of [local currency]. Isn't that the whole point of a legal tender?
If I lend someone 1 BTC, can I force the borrower to repay me in BTC? How would that even work if the borrower has already spent the BTC?
If you give the borrower a loan priced in BTC, you can attempt to compel them to repay the loan in a BTC-equivalent amount of their local currency. "Legal for all debts, public and private", and all that.
