Imo there's nothing peculiar about USDT except for the fact that they are directly financing Uncle Sam's addictions. If rates continue higher for whatever reason, Tether will start having unrealized losses on all those billions of USTs, eseentially like the situation US banks find themselves in now.

If they held USD this wouldn't be an issue, but they would also have no yield on their reserves. They have been returning decent profits this year and have been buying Bitcoin with it iirc.