A new index from the Hong Kong Monetary Authority finds banks in the city are far from ready for quantum computing threats, raising concerns for tokenized assets and digital finance infrastructure
Hong Kong's banking sector is facing a significant security gap as quantum computing advances threaten the cryptographic foundations of digital finance. According to a new Quantum Preparedness Index (QPI) released by the Hong Kong Monetary Authority (HKMA), banks in the city scored just 2.3 out of 10 for readiness against quantum attacks. The index, published on July 27, is the first sector-wide assessment of its kind and highlights that nearly half of surveyed banks have yet to begin formal planning for post-quantum security.
The HKMA's findings arrive as Hong Kong accelerates its adoption of tokenized finance, with banks and government entities increasingly relying on distributed ledger technology (DLT) for asset custody, payments, and bond issuance. The regulator's accompanying white paper warns that quantum computers capable of running Shor's algorithm could break widely used cryptographic systems such as RSA and elliptic-curve cryptography. If these protections fail, attackers could forge digital signatures, compromise transaction approvals, and undermine the trust that underpins payment and settlement networks.
Tokenization and Quantum Risk
The risk is particularly acute for Hong Kong, where tokenized assets have grown rapidly. By the end of 2025, banks in the city held more than HK$14 billion (about $1.8 billion) in digital assets under custody, a figure that rose roughly 180% in a single year, according to a February 2026 speech by Financial Secretary Paul Chan. Tokenized deposits reached HK$29 billion, and the government issued three rounds of tokenized green bonds since 2023, totaling approximately HK$16.8 billion ($2.1 billion). These products depend on cryptographic security to ensure the integrity of transactions and asset ownership records.
The HKMA's white paper emphasizes that a successful quantum attack would not only expose individual transactions but could destabilize the infrastructure supporting settlement, custody, and identity verification. Distributed ledger applications, which are central to tokenized finance, rely on cryptography for their core functions. A breach could have systemic consequences for both banks and their customers.
Early Adoption and Sector Response
While most banks remain in the early stages of quantum risk planning, the HKMA identified at least one institution that has completed a proof-of-concept for post-quantum cryptography in distributed-ledger connectivity. The white paper also highlights HSBC's 2024 pilot using quantum-safe technology to transfer tokenized gold across distributed ledgers as an example of early real-world adoption.
Transitioning to quantum-resistant cryptographic systems is a complex, multi-year process. The HKMA is urging banks to begin with comprehensive asset inventories, risk assessments, and migration planning. Although the regulator has not set interim targets, it plans to monitor progress through future QPI updates, with a goal of achieving full sector readiness-a QPI score of 10-by 2030.
Strategic Implications for Digital Finance
The quantum security initiative is part of the HKMA's broader Fintech 2030 strategy, which was launched in 2025 and identifies tokenization as a core pillar. The strategy includes more than 40 initiatives, such as expanding real-world asset tokenization, regularizing tokenized government bond issuance, exploring tokenized Exchange Fund papers, and advancing blockchain-based settlement using e-HKD, tokenized deposits, and regulated stablecoins.
For U.S. readers, Hong Kong's experience offers a preview of the challenges that may soon confront global financial institutions as quantum computing capabilities mature. The rapid growth of tokenized assets and blockchain-based financial products means that cryptographic vulnerabilities could have far-reaching effects, especially as cross-border transactions and custody arrangements become more common. U.S. banks, exchanges, and digital asset custodians may face similar pressures to assess and upgrade their cryptographic infrastructure in the coming years.
According to the HKMA, the sector's QPI score of 2.3 out of 10 reflects a lack of formal post-quantum planning at nearly half of surveyed banks as of July 2026. The regulator's target is to reach full readiness by 2030, but the timeline for widespread adoption of quantum-resistant cryptography remains uncertain. The scale of tokenized assets in Hong Kong-over $1.8 billion in digital custody and $2.1 billion in tokenized green bonds-underscores the urgency of addressing these security risks before quantum computing becomes a practical threat.
Quantum computing poses a unique challenge to the cryptographic systems that secure blockchain networks, digital assets, and tokenized financial products. Unlike traditional cyber threats, quantum attacks could render current encryption methods obsolete almost overnight, exposing transactions, private keys, and digital signatures to compromise. Migrating to quantum-resistant algorithms requires coordinated action across banks, exchanges, wallet providers, and infrastructure operators. The transition is likely to involve trade-offs in performance, compatibility, and operational complexity, making early planning and sector-wide coordination essential for maintaining trust in digital finance.
