Regulations are the reason why some exchanges offer tether and stuff like that. Now there is a new one called USDC which is basically run by circle (the C there means coin as far as I know so not USD Circle but USD Coin) and they are owned by a large wall street bank. Now the difference between all these tokens and fiat itself is that if you use a tether at the very least you do not need to deal with any bank at all.

The exchange can deal with a bank (they are making so much money and spending so much after all) but that doesn't mean they can't be really offering bank payments to you, not all banks work with banks all over the world and the ones that does that require a lot of money in return. Hence they give you tokens instead of fiat and they won't have to deal with withdrawals in fiat.