At the end of the day tether will still exists and remain at $1 even if it is a fractional reserve rather than 1:1 . Heck the money in our banks are fractional reserves too but that does not stop everyone from mass panicking and withdrawing.
as long we could withdraw the money fine and have no problem or struggle doing anything most of us won't mass panicking. sure they'll collapse if people are mass withdrawing but well that happens the same too to most of the banks.
even banks will fall when everyone withdraws their assets. however, there is still a lot of negative news about the development of the USDT, such as funds that are not 100% covered with dollars, or anything else. but, as far as I'm using it, it's quite satisfying.