Blockchains (due to constantly changing validators, nodes, etc.) are much harder to shut down than some dedicated service. I think the current administration understands that loose stablecoin regulation further cements US dollar hegemony, curtails other countries attempts to deprive their citizens of payment and savings alternatives and creates more demand for US treasuries (because that's where stablecoin reserves end up). It's a win-win for the US government and bad for governments with a track record of poor fiscal and monetary policy.

Not if the blockchain is developed and administered by a single company!

You don’t need to shut down the actual blockchain network participants to kill it for your citizens.

In practice this isn't true; very few services (in terms of $ spent/earned) are purely virtual and have no physical presence in the country.

To be honest, a nitpick that i have in this comment is that there are other stablecoins aside from us dollar but most people don't seem to use it.

There are gold tokens which I genuinely feel like it can be the best thing ever. Because bitcoin is "digital gold", lmao.... I laugh a lot on this statement nowadays because we genuinely have trustworthy way of having "digital gold" and we don't use that as much as there is hype about bitcoin...

But yes currently, it might benefit the us govt. overall