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The Bank of Italy ran a technical analysis that asks a stark question: What happens if Ethereum (ETH) falls to zero and stays there?
The recently released paper is authored by Claudia Biancotti for the Bank’s Markets, Infrastructures, Payment Systems series. It is listed as Number 74 and runs 11 pages.
According to the Bank, permissionless blockchains like Ethereum act as settlement systems for a wide range of tokens and contracts. The institution treats the question as a stress test on infrastructure rather than only on asset prices.
The note warns that if a native token loses most of its market value and the drop remains persistent, the economic incentives that keep validators running could vanish. Validators might exit, the paper says, and that could make settlement slow or stop.
Based on reports in the Bank’s paper, the chain of effects is simple and worrying. Validators are paid in ETH. If ETH has next to no value, that payment no longer motivates operators.
As a result, transaction settlement could slow dramatically or, in extreme cases, halt. The paper also highlights that other assets using the chain — for example, tokenized securities or fully backed stablecoins — could become hard to move or could face security problems if the network’s defenses weaken.
Italy’s broader regulators have recently stepped up their look at crypto risks. Reports show the Economy Ministry ordered a review of safeguards, and the Bank of Italy’s paper fits into that wider push to quantify risks tied to new payment systems.
Reuters and other outlets covered the regulator-level review in December and January as authorities pressed firms to meet emerging rules.
The authors do not claim the scenario is likely. Instead, the exercise is framed as a way to show how market risk can turn into infrastructure risk. The paper points out there is no formal mechanism to “shut down” a permissionless chain in an orderly way.
Any mitigation would rely on voluntary action by validators, major staking firms, or protocol changes proposed and adopted by the community. That uncertainty is the main policy concern.
The Bank of Italy’s note is a technical, measured look at a worst-case scenario. It uses concrete data to argue that a collapse in Ethereum market value would not only hit holders but could also impair the functioning of systems that now run on Ethereum.
