Question about BTC holding in ETFs for the Institution

If I buy 1 BTC on an ETF…. Is the exchange regulated / required to carry 1 BTC for that equivalent ETF share?

I'm curious about this because if ETFs are allowed to hold less than 1:1 then its just like the crappy bank situation in the wold where the fractional reserves available are fractionally lower than they should be.

Even worse will be if the USD loses value rapidly (more rapidly than it already is) and suddenly everyone wants into BTC, and suddenly the ETF is the fastest way to do it, but …. there aren't any BTC available, so the ETFs are allowed to keep a lower ratio of BTC on hand simply to pacify the masses into thinking they have some security when in fact they do not.