The crypto sector is particularly exposed to the cybersecurity threat posed by the rise of quantum computing, says Moody’s Ratings.
In a report, the rating agency noted that, earlier this week, the U.S. administration elevated quantum computing security issues to a national strategic priority — reflecting a growing view that the dramatic increase in processing power promised by quantum computing is critical to economic competitiveness, cybersecurity, intelligence and defence.
Among other things, new executive orders on the subject aim to support the development of domestic quantum computers and to accelerate efforts to reduce vulnerabilities posed by post-quantum cryptography by 2030–2031 from the previous target of 2035.
Those orders “reflect a broader shift in the quantum discussion,” the report said — shifting the focus from supporting research and development in this area, to preparing for the consequences of successful quantum computing, “particularly its potential effect on cryptographic systems that underpin communications networks, financial infrastructure, software authentication and government systems.”
It also noted that policymakers are wary of the risk that encrypted data is being collected today, with the expectation that it will be able to be decrypted in the future when quantum computers that are powerful enough to break current encryption emerge.
This threat is particularly relevant for industries with large volumes of sensitive data protected by current technology — including the financial sector, critical infrastructure providers and defence contractors, along with governments.
The threat posed by quantum computing is also particularly significant to the crypto sector, the report said.
“Public blockchains, digital asset custodians, exchanges, stablecoin issuers and tokenization platforms rely heavily on public-key cryptography to secure ownership, authorize transactions and manage critical infrastructure,” it noted.
“Unlike traditional financial systems, many blockchain-based systems offer limited ability to reverse transactions or recover assets once cryptographic controls are compromised,” Moody’s warned.
This is particularly significant for public blockchains where “compromised keys may lead to immediate and irreversible on-chain outcomes.”