Here's a possible reason for why a crypto fiat currency with a distributed ledger might be attractive.
Currently, all fiat currencies operate with a central ledger at whatever central bank is authorized to print or destroy units of the currency. For example, every US dollar is linked through a chain of deposits and liabilities back to an account at the Fed since any bank operating in the US is required to hold an account with the Fed. However, this gives the US the ability to control the transfer of USD to use in sanctions.
Suppose you were an Iranian company that wanted to buy goods from the EU, to be paid in USD. In normal times, an Iranian bank with an account at the Fed would ask the Fed to transfer USD from its account to that of the EU bank to complete the trade. However, since Iran is under sanctions, the Fed can freeze the assets and refuse to initiate the transfer or confirm that the Iranian bank has the required funds. Without assurance that you can actually pay for the goods in USD, the EU company decides not to sell any goods and you're stranded from the world market.
Trying to bypass this by buying the goods with Euros doesn't work either, since the Fed can also threaten the USD accounts of EU banks too. Suppose the US catches an EU bank helping an Iranian company trade with a EU company in Euros. The US could then order the Fed to freeze the accounts of the EU bank or extract a fine for violating sanctions. EU banks get spooked away from helping Iranian companies deal with international payments due to the risk of getting themselves locked out of the USD system. All this is thanks to the power the Fed has over the one central ledger of USD that they can modify and freeze at will.
But with a distributed ledger secured with cryptography, the Iranian bank wouldn't have to depend on the Fed to modify their central account book when performing money transfers. They could cryptographically prove that they had a certain amount of USD in their accounts and transfer it to the EU bank in a way that all bystanders can observe and confirm. You would have a currency system with unblockable and unsanctionable transfers, as if you had teleported containers of physically verifiable US dollar bills from Iran to the EU.
This would be the key draw for countries trying to make their fiat currencies crypto. They could then advertise it as a currency that is impossible for the host country to use for sanctions. This boosts the cryptocurrency's viability as a reserve currency, and once enough countries begin using it then the host country could print money to improve their country's consumption, living standards, and economic clout without worrying about inflating the currency away.