Don’t underestimate the importance of market makers - people who create liquidity on the exchanges by constantly resting buy and sell orders on the book, the modern equivalent of the guys on the exchange floor in the bright jackets. Exchanges without market makers lose business to exchanges with market makers. In general, it is rational to trade on the markets with the tightest spreads.
Market makers need mechanisms to move money around and manage risk. When tether did not exist, all this would have been painful, but equally painful for all market makers. This is fine.
Tether created a maybe-good-enough mechanism for bridging conventional money into crypto. Once it existed, then each market maker would have needed to make a decision: use it and get the benefit of it whilst losing sleep at night over its risks, or not use it, lose edge to your competitors, and close up shop. You may find that the market makers hate tether, and recognise it for what it is (wildcat bank) but feel compelled to use it to stay competitive.
Market makers need mechanisms to move money around and manage risk. When tether did not exist, all this would have been painful, but equally painful for all market makers. This is fine.
Tether created a maybe-good-enough mechanism for bridging conventional money into crypto. Once it existed, then each market maker would have needed to make a decision: use it and get the benefit of it whilst losing sleep at night over its risks, or not use it, lose edge to your competitors, and close up shop. You may find that the market makers hate tether, and recognise it for what it is (wildcat bank) but feel compelled to use it to stay competitive.