This seems like the U.S. feds saying "send us your dollars and bank balances and well replace them with a coloured coin which we own all of." Except its not sanctioned by the fed so probably causes all kinds of legal exposure. How long until the exchange gets raided and the reserve $$ confiscated? And how is this any better than just using ripple? (shudder).
Tether sounds much worse than "Liberty Dollars" are that founder ended up in very serious legal trouble.
Thats why you must follow legitimate KYC/AML procedures, and not allow unknown/untrusted persons to exchange fiat.
Craig