And they deserve to be. They are essentially deposit taking institutions that issue out tokens as a receipt of deposit.

The legal loopholes that allowed them to exist without much reserve requirement was particularly dangerous. I remember USDT started announcing that they were no longer 100% backed by fiat (as they wanted to invest into assets that brought them a profit).

Without a centralised system of deposit insurance, a "run" is sure to happen with such loose standards.

Note though that this is entirely different from decentralised cryptos which have no obligations to redeem tokens for a certain underlying asset, which is why the regulations should be entirely different for these two asset classes.