The Ethereum economic system is at risk if ETH crashes - warns the Bank of Italy

A new study from the Bank of Italy raises deep concerns about the role of Ethereum as the foundation of modern financial infrastructure. According to economist Claudia Biancotti, a significant drop in the value of ether could impair the ability of the economic system to support millions of transactions daily. The research highlights a shifting perspective: Ethereum is no longer seen merely as a speculative market, but as a critical settlement layer for stablecoins, tokenized securities, and other advanced financial instruments.

How a decline in ether could affect Ethereum infrastructure

Ether (ETH), currently valued at $2.40K, supports the security of the entire Ethereum network through a mechanism called proof-of-stake. In this system, validators—the nodes that confirm transactions—receive ETH as a reward. If the price of ether drops significantly, many validators may shut down their operations because their earnings would no longer cover operational costs.

This scenario is not just a market concern. A reduction in the number of validators directly means a decrease in the total stake securing the network. This would slow down block production and make it harder to defend against potential attacks on the system.

Validators and security: the heart of the blockchain system

Our concern for a stable economic system is directly connected to the health of the validator ecosystem. Each validator has a financial incentive to participate because of ETH rewards, but this incentive is only strong if the price is supported by value. If ETH crashes, the first effects will be seen in transactions relying on a fast and reliable blockchain—from payment systems to on-chain lending services.

The finality and reliability of transactions could decline at critical moments, especially when users need it most. This represents a transition from pure market risk to infrastructure risk—a transformation that most regulatory frameworks are not yet prepared for.

Economic system and regulatory challenges

This discovery has prompted regulators worldwide to think more deeply about token economics. The Bank of Italy proposes two possible directions: the first option is that public blockchains may be inherently unsuitable for regulated finance due to their dependence on volatile native tokens. The second option is to allow their use but with safeguards such as contingency plans, backup settlement arrangements, and minimum standards for economic security.

Ethereum’s economic system is no longer just an internal concern of the crypto community—it has become a factor with potential implications for the stability of the entire financial infrastructure.

Global institutions share concerns

The Bank of Italy is not alone in this concern. The European Central Bank and the International Monetary Fund have also issued similar warnings. Their alerts focus on stablecoins that could become systemically important, especially as their connection to traditional finance continues to grow. These institutions remind us that a severe market shock could trigger asset sell-offs and potential financial contagion.

The Bank of Italy’s study reflects a broader understanding: the cryptocurrency ecosystem is no longer solely dependent on speculative sentiment but on deep structural elements of the financial system that are continually evolving.