The Bank of Italy has modeled what would occur to Ethereum's security and transactability if the worth of Ether fell to zero, treating the network as critical financial infrastructure and not only a speculative crypto asset.
In a brand new research paper titled “What if Ether Goes to Zero? How Market Risk Becomes Infrastructure Risk in Cryptocurrencies,” Bank of Italy economist Claudia Biancotti examined how an extreme Ether (ETH) price shock could impact Ethereum-based financial services that depend on the network for transaction processing and settlement.
Biancotti focused on the connection between validators' economic incentives and the soundness of the underlying blockchain utilized by stablecoins and other tokenized assets.
The paper models how validators rewarded in ETH might respond if the token's price collapses and their rewards lose value.
In this scenario, a portion of validators would rationally exit, Biancotti argues, which would cut back the general stake to secure the network, slow block production, and weaken Ethereum's ability to face up to certain attacks and make sure the timely, final settlement of transactions.
When ETH price risk becomes infrastructure risk
Rather than treating Ether simply as a volatile investment, the study views it as a core input to the settlement infrastructure utilized by a growing share of on-chain financial activity.
Biancotti argues that Ethereum is increasingly getting used as a settlement layer for financial instruments, so shocks in the worth of the native token could impact the reliability of the underlying infrastructure.
What happens if Ether goes to zero? Source: Bank of Italy
This framework allows the Bank of Italy to trace how the market risk of the bottom token could translate into operational and infrastructure risks for instruments built on it, from fiat-backed stablecoins to tokenized securities whose transaction ordering and finality rely upon Ethereum.
The paper emphasizes that disruptions in such a stress event wouldn’t be limited to speculative trading, but could also spill over into payments and settlement use cases, that are increasingly being monitored by regulators.
ECB Warns on Stablecoin Spillover Effects
Other authorities, including the International Monetary Fund and the European Central Bank (ECB), have warned that giant stablecoins could change into systemically vital and pose a risk to financial stability in the event that they proceed to expand rapidly and remain concentrated in a handful of issuers.
An ECB Financial Stability Review report published in November 2025 noted that the structural vulnerabilities of stablecoins and their links to traditional finance mean that a severe shock could trigger runs, fire sales of assets (quick sales of foreign reserves at low prices to cover redemptions) and deposit outflows, particularly if adoption is expanded beyond crypto trading.
The Bank of Italy concluded that regulators face a difficult trade-off in relation to whether and the way regulated intermediaries needs to be allowed to make use of public blockchains for financial services.
It outlines two options: either treat today's public chains as unsuitable to be used in regulated financial infrastructures due to their reliance on volatile native tokens, or allow their use while mandating risk mitigation measures equivalent to business continuity plans, emergency chains, and minimum standards for economic security and validators.
Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph's editorial guidelines and goals to supply accurate and up-to-date information. Readers are advised to independently confirm the data. Read our editorial policies https://cointelegraph.com/editorial-policy
