Are you lamenting the aggression or the mere fact that the organizations are being asked to prove adequate backing?
Zero reserves means print as much as you want, subject only to the bank's own underwriters. The banks went and minted trillions of dollars in unbacked currency. Most of our fiat money supply comes from M2 and M3 money issued by banks.
Meanwhile, algorithmic stablecoins like DAI have 150% reserves, yet the government doesn't trust them as much as the banking system?
If you search online for the Fed's own explanation for these policies, they make some overconfident assertions about "ample reserves" and how their policy assumes there are now "ample" reserves, so they can just set the reserve requirements at zero. Seems to me some political doublespeak in order to provide the unprecedented level of Keynesian stimulus that was planned to be released.
"OK, can we see behind the curtain?"
"Absolutely not"
"Can I cash them in with you to get the dollars back out?"
"Hell no"
That's why it's relevant. Because this is not a bank or bank-like situation, and comparisons to fratctional reserve are spurious. They're sold specifically on not being fractional.
https://www.ft.com/content/529eb4e6-796a-4e81-8064-5967bbe3b...
I would have thought that would be a fantastic reason never to go anywhere near the entire ecosystem, personally. Especially as their website is still doing it (or at least using weasel-words to heavily imply it) -
“All Tether tokens are pegged at 1-to-1 with a matching fiat currency (e.g., 1 USD₮ = 1 USD) and are backed 100% by Tether’s reserves.”
Aka if you loan 1T dollars and get 50B in interest payments after expenses and 40B in loan defaults you didn’t lose money.
Certainly this can go sideways when they don't understand the risk in one type of loan, like 2007-2008, but most of the time, they can figure this out.
Second Banks want to have outstanding loans. They are going to issue new ones as the old ones are paid off. Therefore cash on hand + outstanding loans get modified by defaults, new loans, principal payments, and interest payments. Suppose from that 1,000B in loans they got 5B in interest, 3B in principle payments, and had 4B in defaults and issued 7B in new loans. They now have 1,000 - 3 - 4 + 7 = 1,000B in loans and an extra 5 + 3 - 7B = 1B in cash.
Those changes can be calculated on a day by daily, monthly, or yearly basis, but dividends means a bank can make money in some year and still fail. Which is why regulators care about bank reserves not profitability.
The "zero reserve requirement" means that banks are now required to keep $0 in their account with the Federal Reserve Bank for every $100 of deposits they take in--a literal pile of cash in their bank vault would not count a dime. That is the only thing that qualifies as reserves for that requirement, and hopefully you understand that that is by no means an accurate reflection of any lay person definition's of "reserve".
Instead, modern financial regulations use capital requirements instead of reserve requirements. In essence, banks need to keep a buffer of their own cash--this isn't part of the assets/liabilities calculation--that can be raided if assets prove to be undervalued, and the amount that is needed depends on the risk of the assets. Something safe like cash requires no equity to be covered, while something like a mortgage might require about 3.5% of the par value in equity, and something like cryptocurrency 100%.
Note that you can also judge banks by how much their assets exceed liabilities. A typical bank is seen as perilously close to insolvent if their assets are "only" 107% of liabilities. By this metric, I will point out that Tether's assets are about 101% of liabilities the last I checked--and that's assuming that Tether's statement of its assets are in fact accurate, which given their history of lying, is not necessarily a safe assumption.