Italy's central bank has published research warning that a severe collapse in ether's price could compromise Ethereum's (ETH) ability to function as settlement infrastructure for stablecoins and tokenized securities.
The January 2026 paper by Bank of Italy economist Claudia Biancotti examines how market risk in unbacked cryptocurrency could morph into operational risk for the blockchain's $800 billion ecosystem.
The theoretical stress test does not predict an actual ETH price crash but models system resilience under extreme scenarios where validators compensated in ether might rationally cease operations.
Infrastructure Risks
Ethereum relies on over one million validators who secure the network through proof-of-stake consensus and receive rewards in ETH tokens.
If ether lost substantial value persistently, validator economics would deteriorate as rewards denominated in ETH become worthless regardless of staking yields measured in token terms.
The paper argues validator exodus would reduce total staked ETH securing the network, currently valued at approximately $142 billion with an economic security budget of $71 billion.
Degraded validator participation would slow block production, weaken transaction finality guarantees, and increase vulnerability to double-spending attacks where malicious actors require control of less total stake.
Stablecoins representing $140 billion in combined USDC and USDT supply on Ethereum would face settlement disruptions despite full dollar backing by their issuers.
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Regulatory Implications
The research frames permissionless blockchains as infrastructure dependencies rather than purely speculative assets, reflecting regulatory scrutiny from European Central Bank and International Monetary Fund analyses published in 2025.
Biancotti outlines regulatory options including prohibiting supervised financial institutions from relying on public blockchains or requiring risk mitigation through business continuity plans and backup settlement arrangements.
Suggested safeguards include maintaining off-chain ownership databases, pre-selecting contingency chains for asset migration, and establishing minimum economic security budget thresholds for institutional use.
The paper notes cross-chain bridge technology enabling asset transfers remains vulnerable to cyberattacks, while approximately $85 billion locked in decentralized finance protocols could face governance delays during crisis scenarios.
Historical data shows Ethereum's validator count remained stable despite price volatility, but the research identifies potential triggers including governance failures, emergence of superior competing blockchains, or macroeconomic shocks diverting capital from risk assets.
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