As I see it, the federal reserve official's statement really boils down to the fact that if Tether (or any other widely adopted stablecoin) is conventionally accepted to have the value of $1 USD, and the people running Tether can print them, then those people can effectively print USD. And THAT, from the Fed's perspective, is a risk to financial stability.
If I was the Fed I would seriously consider creating my own TheRealUSD stablecoin. Create a token that you have mint/burn control over, and create a portal that allows people to exchange USD for the stablecoin and the stablecoin for USD. No doubt a number of the crypto-libertarians out there will not trust that thing and might object to using it. But from the other perspective which would you trust more? A USD stablecoin run by some random collection of tech people? Or a USD stablecoin run by the Fed?