Accepting it as legal tender doesn't mean it is what the loans are denominated in. Nobody sane would denominate loans in BitCoin. (There are loans denominated in BitCoin. The obvious syllogism applies.)
Yes of course, I'm still assuming USD denominated loans. However repayments may be done in BTC still, unless I'm misunderstanding what legal tender actually is. Even if I, as a creditor, convert my payments from BTC to USD as soon as I can there will be a volatility, right? I wouldn't dare to predict the impact scale but certainly enough to warrant consideration?
But if I have a loan for a value that corresponds to about 1 bitcoin and $53, then doesn't legal tender mean I have to accept 1 bitcoin and $53 in exchange for it? The fact that tomorrow the value will be 1 bitcoin and $196 seems irrelevant.
And this is significant: debtors could repay their debts when bitcoins look like they will decrease in value with respect to the currency of denomination with an intent to harm the debt owner.
In the 19th century, there were dual currency systems with fluctuating exchange rates. I don't know anything about why they failed, just that they failed...
A loan can be denominated in a currency other than what you directly pay for it with. That just means somebody is automatically converting it for you. Financially, it's exactly the same as using your Visa to buy something in a foreign currency; you're paying in Euros for a loan denominated in dollars, and you'll pay it off in dollars.
The loan can't be denominated in multiple currencies at once, as you seem to be thinking of, because that would make the loan amount undefined unless the two currencies were directly pegged to each other.
You can have a loan of 100 dollars. Or you can have a loan of .01 BitCoin. You can pay either off in dollars or BitCoin. How much a given pile of currency will pay off depends on exchange rates. But that doesn't affect the loan itself.
I somewhat sarcastically said nobody would denominate a loan in BitCoin, but not sarcastically at all, nobody would ever denominate a loan in "either this much of one currency or this much of another" because that is seriously a no-win situation for the entity loaning money. Obviously the loanee would pay it off in whatever is cheaper.
If course they do. It's called a dual currency deposit. Suffice it to say that a bank would never accept these, but they can easily convince customers to do it since the published interest is much higher than a regular deposit.
