I'm only an armchair expert, but this is not really banking... nor are there 'reserves', fractional or otherwise. In Stan's demo, there is no product at the outset. Lets assume an orcharding scheme - say, sandalwood.

• In point 1: "Explain these steps to your customers" your are responsible for a prospectus to notify your customers about auditing arrangements, expected sandalwood yields and time to yield, sandalwood delivery terms, sundry risks like pests and climate change, yada yada due diligence.
• In point 4: "Borrow Heros by locking up the BTS in escrow". By using escrow, the BTS is backed 1:1. No fractional reserves, otherwise we'd be as crooked as the banksters. And the customer already knows they are betting against the price of BTS in addition to the risks already explained in point 1, the prospectus.

There is no argument this is financial engineering, but its orders of magnitude simpler and less opaque and less contrived than that which overheated the US housing market. In answer to your question: ["isn't this opening the door..."] well, no. This scheme is nothing unusual, if the prospectus is exposed correctly. Objectively 'bad' ideas abound. This scheme is balanced on trust, less delicately than perhaps fractional reserve lending is. Certainly less punishing on the sandalwood harvester, than a traditional big-bank securitised loan, because:

• the BTS are already in escrow
• the BTS are not an occupied domicile (mortgage) or means-of-production (secured by your pickup, orchard, tractors, etc).
• This is seed money, venture capital, crowdfunding, whatever - it's not a securitised loan.