A recent Bank of Italy research paper, authored by Claudia Biancotti of the Directorate General for Information Technology, issues an unprecedented warning: the collapse in the price of Ethereum (ETH) would not only be a speculative event, but could shatter the blockchain's ability to regulate transactions, freezing over $800 billion in digital assets.
The report challenges an industry dogma: the idea that regulated assets, such as tokenized stocks and bonds, are insulated from the volatility of the underlying cryptocurrency. On the contrary, the research shows that the reliability of 'permissionless' networks is inextricably linked to the market value of an unsecured token.
The economic trap of validators
Unlike traditional financial systems, operated by regulated entities and supported by central banks, Ethereum relies on a decentralised network of validators. These operators are under no legal obligation to serve the system; they act for profit.
The problem, according to Biancotti, stems from the real costs (hardware, energy, connectivity) that validators pay in fiat currency, against revenues denominated in ETH. If the dollar price for ETH were to fall 'substantially and persistently', validators' earnings would be wiped out.
In a 'downward spiral' scenario, rational operators would shut down machines, leading to a total network shutdown. Without validators, assets would become 'immovable', regardless of their off-chain robustness.
Security budget crunch
The risk is not just about blocking payments, but vulnerability to attacks. The security of Ethereum depends on its 'economic budget', i.e. the cost required to gain control of the network. As of September 2025, that budget was estimated at 17 million ETH, about $71 billion.
However, if the price of ETH plummets, the cost to corrupt the system also drops dramatically. A malicious user could take control of the chain with minimal expense, not to steal ETH (now worthless), but to manipulate the more than $800 billion in Real World Assets (RWA) hosted on the platform.
A systemic risk for real finance
By the end of 2025, Ethereum was hosting more than 1.7 million assets, including $140 billion in the two major dollar-pegged stablecoins. If an attacker took control of a weakened network, he could theoretically 'double-spend' on tokenized government or corporate bonds.
This scenario would transfer the shock directly into the balance sheets of traditional finance. If the issuers were legally obliged to redeem the tokens at face value, but the on-chain ledgers were compromised, the damage would hit financial institutions and investment funds.
The absence of a ‘lender of last resort’
The paper highlights the impossibility of a flight to safety in the event of a crisis. The 'bridges' between blockchains are often vulnerable and not scalable for a mass exodus. Moreover, with some $85 billion locked up in DeFi protocols, the lack of central coordination makes it impossible to stop trading to calm panic.
Biancotti also rules out the intervention of large private actors, calling it 'unlikely' that exchanges could stabilise the price of ETH during a real crisis of confidence.
Regulatory proposals
In conclusion, the BoI suggests that regulators should not support the prices of crypto, but impose business continuity requirements on issuers. The main proposal is that issuers maintain off-chain proprietary databases and designate a 'contingency chain' to which assets can be migrated should the Ethereum layer fail.
