Hong Kong prepares banks for quantum threats amid tokenization push

The Hong Kong Monetary Authority (HKMA) has introduced a new framework to evaluate banks' readiness for threats posed by quantum computing, coinciding with Hong Kong’s increased adoption of tokenized deposits, digital assets, and blockchain settlement. On Monday, the HKMA released a white paper on quantum preparedness alongside the sector’s inaugural Quantum Preparedness Index (QPI). The assessment revealed a low overall readiness score of 2.3 out of 10, noting that about half of financial institutions surveyed had not yet implemented formal plans for post-quantum security. The HKMA has set a goal for the sector to reach full readiness, represented by a QPI score of 10, by the year 2030.

This initiative aligns with Hong Kong’s broader strategy to move traditional financial activity onto distributed ledgers. Government data shows that three rounds of tokenized green bonds have been issued since 2023, totaling roughly HK$16.8 billion (approximately $2.1 billion). Additionally, through Project Ensemble, the HKMA is promoting tokenized deposits and digital-asset settlement. The white paper warns that blockchain-based payments and distributed ledger applications rely heavily on cryptography, which quantum computing could potentially undermine, causing significant disruption. For example, HSBC is noted to have employed quantum-safe technology in 2024 to transfer tokenized gold using distributed ledgers, highlighting early efforts to address these risks.

The HKMA’s quantum preparedness effort follows the 2025 launch of its Fintech 2030 strategy, which prioritizes tokenization among its key pillars. The regulator has plans to accelerate real-world asset tokenization, formalize government bond token issuance, and experiment with tokenized Exchange Fund papers. Blockchain settlement is expected to be sustained by digital hong kong dollars (e-HKD), tokenized deposits, and regulated stablecoins. Financial Secretary Paul Chan reported that by the end of 2025, banks in Hong Kong were holding over HK$14 billion (around $1.785 billion) in digital assets under custody, representing a 180% year-over-year increase, while tokenized deposits had grown to HK$29 billion ($3.7 billion).

According to the HKMA white paper, quantum computers capable of executing Shor’s algorithm at scale could eventually compromise widely used cryptographic security methods such as RSA and elliptic-curve cryptography. This vulnerability could enable attackers to decrypt protected information or forge digital signatures, undermining transaction authorization, identity verification, and trust in financial systems. Because replacing entrenched cryptographic infrastructure is a long process, the regulator strongly encouraged banks to begin taking inventory of their systems, conducting risk assessments, and planning cryptographic upgrades well before scalable quantum machines become available.