Sure, but USDT / USDC are pretending not to be wildcat banks, when that’s probably exactly what they are.

If you tell people that they’re buying the crypto equivalent of T-bills on one side, but then turn round and lend those $ to a combination of Chinese construction companies and crypto exchanges on the other side then you’re not being straight with people - you’re exposing them to a sizable risk of loss in return for nothing.

In the trad finance world, unsophisticated investors get the benefit of Fed / BoE / ECB banking bailouts for their (relatively) small balances if the bank they put their cash in goes under & bigger players understand the risks & choose their counterparties accordingly. There’s no central bank of crypto out there to bail out USD(T|C) if they go tits up & if they’re lying about their risk exposure then you won’t know anything about it until suddenly there aren’t any $ to be had.

Yeah, up to 100k per bank here in europe. Anything over that is simply gone. In return you're paying negative interest, or some custody fee of around -1%.

offtopic, but I don't believe banks will be bailed out any more. They did so, and it didn't turn out so great.