[lawn]

The minor difference is that you can withdraw your balance from banks, but you cannot redeem Tethers to what it's supposed to be backed by: U.S. dollars.

[teknopurge]

Everyone cannot actually withdraw their balance to fiat all at once.

[lawn]

You're right, due to fractional banking and if people do a bank run will happen and the bank will fail (unless someone saves it).

But it's at least possible to withdraw from banks. Redeeming Tethers is impossible.