$800 Billion Freeze: Bank of Italy Warns of Ethereum Infrastructure Collapse

• Economist Biancotti paper analyzes how an ETH price collapse could spread risk across crypto markets.
• Bank of Italy’s analysis recasts Ether not just as an investment, but as a vital piece of the Ethereum system’s inner workings.
• The bank also warns that such an event could disrupt digital financial assets even if those assets are usually considered low-risk.

The Bank of Italy has issued a striking warning of a big collapse in the price of Ethereum (the second-largest cryptocurrency). It could transform what many view as market risk into infrastructure and financial stability risk, potentially freezing more than $800 billion worth of assets that rely on the Ethereum network.

In a research paper called “What if Ether Goes to Zero? How Market Risk Becomes Infrastructure Risk in Crypto,” economist Claudia Biancotti examines a what-if scenario where the price of ET…

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