really is just a bank without any of the regulatory safeguards

A "bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans" [1]. Tether doesn't offer demand deposits--withdrawals are subject to a minimum and fee [2]. It's thus not a bank, but a bank-like shadow bank [3].

[1] https://en.wikipedia.org/wiki/Bank

[2] https://tether.to/en/redeem-tethers-to-fiat-currency/

[3] https://en.wikipedia.org/wiki/Shadow_banking_system