The great irony of Tether is that it must be fully reserved precisely because it is not regulated. A bank can create dollars because, thanks to regulation, people TRUST that the dollars can be spent. But tether is just a payment method. It cannot invest deposits because no one is sure that the outfit's reserves are adequate. That is enormously wasteful and, in the long run, very uncompetitive. Thus, only criminals are likely to find Tether any better than CBDCs.

People seem not to grasp that a VISA card is a stablecoin machine. The user "buys" VISA bucks at the check-out counter, and the merchant accepts those VISA bucks in payment, converting them quickly to money. The VISA bucks are stablecoins issued by the card issuer. They don't exist long, but they could. Overpay your VISA bill and you get a credit balance. Those are VISA bucks. A gift card is denominated in dollars spendable at a particular merchant. Those dollars are stablecoins. Even a simple checking account, which is a liability of the bank and not the government (except, perhaps, via deposit insurance), is a stablecoin.

Tether is just a technical stopgap. It serves no useful purpose except as a bridge to something better. That's not insignificant, but it is transitory. If Tether made itself a bank, with full regulation, it could invest deposits in real investments. How is that not better than the current financial onanism of claimed 100% reserving?