In practice, yes. Because you're just pushing the backing question on to them; banks rely on withdrawals being de-correlated. Not everybody takes their money out at once. A single bank-sized account ruins that model.

Also, the larger it gets, the bigger the money laundering question gets. "We're providing seventy billion dollars of financial services to unknown parties" is not a sustainable position with a reputable bank. Tether have already got banned from several banks and are being very cagey about who they bank with.