Digital finance at risk due to unspoken quantum conundrums

Digital finance at risk due to unspoken quantum conundrums | Editorial

The U.S. National Institute of Standards and Technology (NIST) and other regulatory bodies are finalising new post-quantum cryptographic standards, marking a significant shift in the digital finance landscape. This move comes as the regulatory focus is shifting towards tech resilience, including quantum-safe cryptography.

The potential exposure of stablecoins, currently valued at $3.3 trillion, could lead to systemic risks if not addressed appropriately. Stablecoins, like other digital asset systems, currently use older cryptographic systems such as RSA or elliptic curve cryptography, which may be vulnerable to quantum computers.

However, the stablecoin sector is gradually transitioning towards quantum-secure cryptography. Initiatives like BTQ's Quantum Secure Stablecoin Network plan pilots in Q4 2025, aiming to integrate post-quantum signatures without disrupting current user workflows. This gradual transition from classical systems signals the maturation and growing institutional adoption of quantum-secure cryptography.

Chase Ergen, an entrepreneur and strategic advisor at the intersection of telecommunications and decentralized finance, is driving this change. Ergen's commitment to building accessible, transparent, and future-ready financial systems is evident in his work. He serves on the Board of Directors at DeFi Technologies Inc. and is Executive Director of the Make America Wealthy Again (MAWA) Super PAC.

Ergen's experience in satellite and telecommunications, strategic involvement in 5G development, blockchain infrastructure, and fintech policy, make him a key figure in this transition.

Lattice-based and hash-based cryptography are examples of quantum-safe cryptography. Strong issuers of stablecoins must adopt quantum-resistant cryptography for protection. Digital signatures could be broken almost instantly with powerful quantum machines, making it crucial for stablecoins to be designed with "crypto-agility" to enable seamless upgrades and quick adaptation.

New certification standards and deadlines for demonstrating quantum-safe compliance are expected due to regulatory readiness. Stablecoins that treat post-quantum infrastructure as a baseline, utilize quantum-safe cryptography, and are designed for crypto-agility will set the new gold standard for digital money.

The GENIUS Act, which allows regulators to create additional rules and capital requirements for risk management, also mandates oversight, transparency, and compliance requirements for stablecoin issuers operating in the U.S. This act underscores the importance of preparing for the future and ensuring the stability and security of digital finance systems.

The rise of programmable stable-value tokens in digital economies makes addressing quantum risk even more urgent. Public keys, always exposed on blockchains, make them vulnerable to quantum-equipped attackers. It is crucial to prioritise the adoption of quantum-safe cryptography to safeguard these digital assets and the financial systems that rely on them.