Earlier quoted context omitted.
When you put money in the bank, it's backed by 1% real assets (go fractional reserve money!) So let's say I don't want to put my money into something that is only 1% backed (See the Greek dept crisis). I could store cash under my mattress, but that also has some major risks. With a stablecoin like UST, you 100% own it. Governments can't confiscate it. It's 100% backed by the asset behind it (not talking about Tether…
How can't a government confiscate the currency hold by stable coin provider? They are the government, they can do any tyrannical move they want.
So in case of UST, as long as the Terra network is up, your coins are there.
What would it take for a government to take down the Terra network? I guess more than what it takes to take down the BitTorrent network. And last time I checked, I can still download any movie on there.
So a government being able to confiscate a wallet on a blockchain, seems very unlikely if you protect it well.