Couldn’t a government just destroy a stable coin by seizing the currency backing it? Isn’t the point of a cryptocurrency supposed to be that it’s not controlled by any government?
I think the point of fiat backed stable coins are more for getting around regulations (eg Tether) and a fiat on-ramp for getting into the ecosystem. Certainly if the government seized a large portion of Tethers assets then that could affect other assets, but this actually has already happened with (a small portion, not large) Tether and nothing catastrophic happened.