The latest research from the Bank of Italy shows that if the native Ethereum token ETH crashes to zero, it could trigger systemic risks in the on-chain financial ecosystem, impacting stablecoins, DeFi, and institutional-grade tokenized assets.
(Background: Standard Chartered predicts 2026 as “Ethereum Year” with prices reaching $7,500, and by 2030 hitting $40,000)
(Additional context: Ethereum’s graduation exam: Vitalik wants a “walk-away anytime” self-operating world)

Table of Contents

• Validator and network risks in extreme scenarios
• How market risk evolves into infrastructure risk
• Warnings from European regulators
• Background and global significance

The Bank of Italy (Banca d’Italia) recently published a research report titled “What if Ether Goes to Zero? How Market Risk Becomes Infrastructure Risk in Crypto.” This report simulates an extreme scenario where the price of Ethereum (ETH) drops to zero, exploring potential impacts on the network’s security and transaction settlement capabilities.

Authored by Italian economist Claudia Biancotti, the report is part of the “Markets, Infrastructure, and Payment Systems” (Mercati, infrastrutture, sistemi di pagamento, MISP n. 74) series and is considered one of the most closely watched central bank stress tests in the cryptocurrency field recently.

The core message of the report is to view Ethereum as a critical financial infrastructure rather than merely a speculative asset, and to explore the risks that could emerge if the native token ETH’s price plummets close to zero, threatening the entire network and on-chain financial ecosystem.

Validator and Network Risks in Extreme Scenarios

As is well known, Ethereum uses a “Proof of Stake” (PoS) consensus mechanism, where validators must stake ETH to participate in block validation and earn rewards. The report notes that if ETH’s price crashes, the economic returns for staking will approach zero, prompting many validators to rationally unstake, leading to a significant reduction in total staked ETH.

This would cause the “economic security budget” of Ethereum—the minimum cost required to successfully attack the network—to shrink dramatically. The report states that, at the time of research, this budget was approximately 17 million ETH, worth over $71 billion. A reduction in staked ETH would make the network more vulnerable to 51% attacks or other malicious activities.

How Market Risk Evolves into Infrastructure Risk

The report bluntly states that once validators exit en masse, a chain reaction of negative effects will follow:

• Decreased block production speed
• Longer transaction confirmation times
• Reduced finality and settlement capacity

These changes will directly impact financial services relying on Ethereum for settlement, including:

• Decentralized Finance (DeFi) protocols
• Stablecoin systems
• Institutional-grade tokenized assets (RWA)
• Layer 2 networks

The report indicates that, in this way, ETH price volatility—initially a “market risk”—may ultimately evolve into systemic infrastructure and financial stability risks. This is not limited to speculative trading but could affect Ethereum’s reliability as a settlement infrastructure. The reason is that an increasing number of financial instruments, including stablecoins and tokenized securities, depend on Ethereum for transaction ordering and final settlement, meaning ETH’s market fluctuations could translate into operational and infrastructure risks.

Warnings from European Regulators

The study also warns that regulators need to carefully consider the risks of using public blockchains in financial services. Both the International Monetary Fund (IMF) and the European Central Bank (ECB) have warned that large stablecoins, if rapidly expanding and highly concentrated among a few issuers, could become systemically important tools. In the event of price shocks or structural disruptions, this could trigger bank runs, asset sell-offs, and deposit outflows.

The Bank of Italy proposes two policy options: one, that existing public chains are unsuitable as regulated financial infrastructure; and two, that they can be used with appropriate risk mitigation measures, including business continuity plans, backup chains, and minimum standards for validators and economic security.

The report emphasizes that, as the crypto financial ecosystem expands, regulators face the challenge of balancing innovation with financial stability.

Background and Global Significance

Biancotti’s research appears at a critical juncture in 2025-2026, as institutionalization accelerates in the crypto market. Regulatory clarity in the US and other regions is increasing, crypto ETFs are developing steadily, and many institutions are beginning to see public chain settlement as a key financial infrastructure; meanwhile, stablecoins, tokenized assets, and traditional finance are becoming more interconnected.

Using “ETH going to zero” as an extreme tail risk scenario, the Bank of Italy reminds regulators and market participants: the prices of crypto-native tokens are no longer just a matter of speculation but could impact the stability of the entire on-chain financial ecosystem.