The Bank of Italy has conducted a study analyzing the potential risks to Ethereum's security and settlement capabilities should the value of Ether (ETH) plummet to zero. The research, spearheaded by economist Claudia Biancotti, moves away from viewing Ethereum as simply a speculative asset, instead considering it as a critical piece of financial infrastructure. The study emphasizes the link between the economic incentives for validators and the overall stability of the blockchain, especially concerning stablecoins and tokenized assets built upon it.
The paper models a scenario where a collapse in ETH value leads validators, who are compensated in ETH, to exit the network, reducing the total stake securing it. This reduction could slow down block production and weaken Ethereum's defenses against attacks, potentially impacting the timely settlement of transactions. Biancotti argues that because Ethereum is increasingly used as a settlement layer for financial instruments, it is vital to consider how fluctuations in Ether's value can impact the reliability of the underlying infrastructure.
The Bank of Italy's analysis suggests that market risk in the base token, ETH, can evolve into operational and infrastructure risk for instruments built on Ethereum, including fiat-backed stablecoins and tokenized securities. The study cautions that disruptions could extend beyond speculative trading, affecting payment and settlement use cases that are under regulatory scrutiny. In a scenario where ETH's price drops to zero, assets on the Ethereum blockchain, including fully-backed stablecoins, might become impossible to transfer. Even if the infrastructure remains operational, safeguards against transaction manipulation could be weakened, potentially enabling malicious actors to spend the same tokens multiple times.
Other financial organizations have voiced similar concerns regarding the systemic importance of stablecoins and their potential risks to financial stability. An European Central Bank (ECB) Financial Stability Review report from November 2025 highlighted the vulnerabilities of stablecoins and the potential for severe shocks to trigger runs, asset fire sales, and deposit outflows. The Bank of Italy also previously warned of the risks associated with integrating cryptocurrencies into the traditional financial system, citing concerns about the monetary sovereignty of the European Union and the stability of Eurozone payment systems.
The Bank of Italy concludes that regulators face a trade-off regarding whether supervised intermediaries should rely on public blockchains. While some Italian banks are adopting crypto with caution, the central bank highlights systemic risks linked to crypto volatility, regulatory gaps, and the potential contagion of markets. The rise of cryptocurrencies and stablecoins has contributed to a significant increase in the market capitalization of global digital assets, but this growth also exacerbates global market vulnerabilities. The central bank's report also addresses the effects of pro-crypto policies, which have strengthened the appeal of cryptos, especially among large companies.
