The yield is all they care about, no? And not having a run on the reserves. Their liabilities are denominated in the same USD and USD-like treasuries as their assets, so as long as the redeem demand doesn't outstrip their yield rate and reserves, they're still making rather large profits.

Stablecoins in general are also a large source of demand for the US dollar and its treasures/interest products, so the US gov't has a cynical reason to just allow Tether and participate via USDC/Circle. Even if the competitors to Circle exist, they all still need to buy and hold the US dollar which is a contributor to the whole "Dollar Milkshake" theory from Brent Johnson