The ETH crisis will reorder the role of Ethereum in global financial infrastructure

A recent study by the Bank of Italy warns that a drastic decline in ether’s value could fundamentally alter the way Ethereum functions as the backbone of the global financial settlement system. This research no longer treats Ethereum merely as a speculative asset but as critical infrastructure that must be carefully managed by international regulators.

Economist Claudia Biancotti from the Bank of Italy analyzes ETH price collapse scenarios through the lens of financial stability, not just market volatility. These findings highlight a fundamental shift in how global financial institutions view blockchain networks that facilitate billions of dollars in transactions every day.

Validators and Security Mechanisms: Weak Points in the System

The Ethereum blockchain implementing proof-of-stake relies on validators—thousands of participants paid in ETH—to secure the network and accurately order transactions. This mechanism creates a deep economic dependency: if ETH’s value drops significantly, many validators will face rational calculations to shut down their operations.

Biancotti emphasizes that a reduction in stake on the network will have a domino effect. Fewer validators mean slower block production, reduced transaction finality, and increased attack risk. At the most critical point, when users need network reliability the most, the system becomes fragile.

ETH’s current price is around $2,400 USD, but this research questions: what if the worst-case scenario occurs? The native token economy becomes a determining factor in the security of financial infrastructure, not just a technical detail.

Stablecoins and Decentralized Finance Applications: Systemic Exposure

Ethereum’s infrastructure now supports a much more complex ecosystem than token trading. Stablecoins, tokenized assets, and onchain lending protocols depend on Ethereum’s ability to process transactions quickly and securely. Disruptions at this foundational layer will ripple through all applications built on top.

Biancotti identifies a paradigm shift: from market risk (speculative price fluctuations) to infrastructure risk (payment and settlement system stability). This is a framework increasingly adopted by global regulators when evaluating public blockchains.

The European Central Bank and the International Monetary Fund have issued similar warnings about large-scale stablecoins. Both institutions are concerned that if issuance becomes concentrated and interconnected with the traditional financial system, market shocks could trigger massive withdrawals and forced asset sales, threatening macroeconomic stability.

Regulatory Dilemma: Protection or Restriction?

Biancotti’s research paper presents difficult choices for policymakers. Regulators could take a strict stance: classify public blockchains relying on volatile tokens as unsuitable for regulated finance. Alternatively, they could permit usage under strict conditions—contingency plans, reserve settlement mechanisms, and minimum economic security standards.

There is no easy middle ground. Each option carries consequences for innovation, competitiveness, and financial stability. What is clear is that the Ethereum token economy is no longer viewed as an internal crypto industry issue but as a strategic variable with potential impacts on the entire global financial system.

The Bank of Italy’s research marks a turning point: Ethereum has risen from being a platform for speculative assets to a strategic infrastructure that must be considered in international monetary and fiscal policies. How the regulatory world responds to this challenge will determine the future relationship between blockchain technology and traditional financial systems.