I have no crypto investments, but this is basically where the line is for me. If they took the 1 USD backing the coin and invested it in US government bonds so that only a fraction is immediately available (but a large enough fraction to cover the most likely withdrawal rates) then it would be fine with me though they should advertise that more clearly.

If they take the money and invest it in ‘good’ companies, that is too much risk to the underlying assets.

Though I’m American and could see foreigners not thinking US bonds were safe enough.