The Bank of Italy modeled what would happen to Ethereum’s security and settlement capacity if the price of Ether fell to zero, treating the network as critical financial infrastructure rather than just a speculative crypto asset.
In a new research paper titled “What if Ether Goes to Zero? How Market Risk Becomes Infrastructure Risk in Crypto,” Bank of Italy economist Claudia Biancotti examined how an extreme price shock in Ether (ETH) could affect Ethereum‑based financial services that rely on the network for transaction processing and settlement.
Biancotti focused on the link between validators’ economic incentives and the stability of the underlying blockchain used by stablecoins and other tokenized assets.
The paper models how validators, who are rewarded in ETH, might respond if the token’s price collapsed and their rewards lost value.
In that scenario, a portion of validators would rationally exit, Biancotti argues, which would reduce the total stake securing the network, slow block production and weaken Ethereum’s ability to withstand certain attacks and guarantee the timely, final settlement of transactions.
When ETH price risk becomes infrastructure risk
Rather than treating Ether purely as a volatile investment, the study frames it as a core input into the settlement infrastructure used by a growing share of onchain financial activity.
Related: Stablecoin risks seen as minimal in Europe amid low adoption and MiCA: ECB
Biancotti argues that Ethereum is increasingly used as a settlement layer for financial instruments, so that shocks to the value of the native token could diminish the reliability of the underlying infrastructure.
This framing allows the Bank of Italy to trace how market risk in the base token could morph into operational and infrastructure risk for instruments built on top, from fiat‑backed stablecoins to tokenized securities that depend on Ethereum for transaction ordering and finality.
The paper emphasizes that, in such stress, disruptions would not be limited to speculative trading, but could spill over into payment and settlement use cases that regulators increasingly monitor.
Related: IMF lays out guidelines for addressing stablecoin risks, beyond regulations
ECB warnings on stablecoin spillovers
Other authorities, including the International Monetary Fund and the European Central Bank (ECB), have warned that big stablecoins could become systemically important and pose financial stability risks if they continue to rapidly expand and remain concentrated in a handful of issuers.
An ECB Financial Stability Review report published in November 2025 noted that stablecoins’ structural vulnerabilities and their links to traditional finance mean a severe shock could trigger runs, asset fire sales (rapid selling of reserve assets at depressed prices to meet redemptions) and deposit outflows, especially if adoption broadened beyond crypto trading.
The Bank of Italy concluded that regulators face a difficult trade‑off over whether and how supervised intermediaries should be allowed to rely on public blockchains for financial services.
It sketches two options: either treating today’s public chains as unsuitable for use in regulated financial infrastructure because they depend on volatile native tokens, or permitting their use while imposing risk mitigation measures such as business‑continuity plans, contingency chains and minimum standards for economic security and validators.
