EU Regulators Raise Quantum Computing Risk for Crypto
European financial regulators are warning that advances in quantum computing could eventually challenge the cryptographic systems that protect blockchain networks and digital assets.
The European Banking Authority, European Insurance and Occupational Pensions Authority, and European Securities and Markets Authority highlighted the issue in a joint risk update. The regulators warned that quantum computing could undermine cryptographic systems used to secure transactions, communications and databases.
The warning adds to growing attention around the possibility that sufficiently powerful quantum computers could break some of the cryptographic techniques currently used throughout the cryptocurrency industry.
European Securities and Markets Authority risk update
Why Quantum Computing Matters for Blockchain Security
Traditional computers process information using bits that represent either zero or one. Quantum computers use qubits, which can process information in fundamentally different ways and could eventually solve certain mathematical problems much more efficiently.
For cryptocurrencies, the main concern involves public-key cryptography. Blockchain networks use cryptographic signatures to prove that a person controlling a private key has authorized a transaction.
If a sufficiently powerful quantum computer could derive a private key from an exposed public key, an attacker could potentially use that key to authorize transactions without the legitimate owner's permission.
This does not mean existing cryptocurrencies are currently vulnerable to such an attack. The source material makes clear that no computer capable of carrying out this type of attack exists today.
Google Research Points to Lower Quantum Requirements
The regulatory warning comes after research from Google Quantum AI highlighted how estimates surrounding quantum attacks on cryptocurrency cryptography have changed.
In March, Google researchers estimated that breaking the cryptography used by many cryptocurrencies could require roughly 20 times fewer physical qubits than earlier estimates had suggested.
A qubit is the basic computational unit used by a quantum computer. Lower hardware requirements could potentially bring cryptographic threats closer than previously expected, although substantial technological challenges remain.
The distinction between theoretical capability and an operational attack remains important. Current quantum computers do not have the scale and capabilities required to break the cryptography protecting major cryptocurrency networks.
Bitcoin Developers Consider a Long-Term Migration
Bitcoin developers have already discussed how the network could transition away from cryptographic signatures that might eventually become vulnerable to quantum attacks.
In February, Bitcoin developer Jameson Lopp and five other co-developers proposed a draft migration plan through Bitcoin Improvement Proposal 361 (BIP-361).
The proposal would phase out Bitcoin's existing signature systems and introduce restrictions on how unmigrated funds could be spent five years after the proposal's activation.
Bitcoin BIP-361 proposal
The proposal is not currently an adopted Bitcoin network upgrade. Instead, it represents one approach developers have proposed for addressing potential future quantum risks.
A migration of this scale would involve moving affected funds to cryptographic schemes designed to withstand quantum attacks. The timing is significant because blockchain networks need to account for assets that may remain inactive for years before their owners attempt to move them.
Ethereum Targets Quantum Resistance by 2029
Ethereum is also incorporating quantum resistance into its longer-term protocol planning.
The Ethereum Foundation has set a target of December 2029 for making Ethereum resistant to quantum attacks across its execution, consensus and data layers.
Ethereum Foundation protocol priorities
The approach reflects the fact that quantum security is not limited to one component of a blockchain. Transaction execution, validator consensus and data infrastructure can all rely on cryptographic mechanisms that may eventually need to be upgraded.
For Ethereum users and developers, the planned timeline provides a long-term framework for preparing the network before quantum computers reach a capability that could pose a practical threat.
Quantum Threat Is a Future Risk, Not a Current Attack
The warnings from European regulators and the work underway across Bitcoin and Ethereum point to a security issue that is being treated as a long-term infrastructure challenge rather than an active cryptocurrency exploit.
There is currently no quantum computer capable of breaking the cryptography protecting major cryptocurrency networks. However, the possibility of faster-than-expected progress is encouraging developers, researchers and regulators to consider migration strategies well in advance.
For crypto users, the key issue is therefore preparation. Blockchain networks may eventually need to replace vulnerable cryptographic systems, while users could need to migrate assets to addresses protected by quantum-resistant technology.
The developments also show why cryptographic upgrades can take years to implement across decentralized networks. Bitcoin's BIP-361 remains a proposal, while Ethereum's roadmap places quantum resistance within a broader multi-year protocol development effort.
As quantum computing technology develops, the security of existing blockchain cryptography will remain an area of research and regulatory attention.
