HSBC partners with Quantinuum to protect tokenized gold from quantum threats, setting new cybersecurity standards in fintech.
Cybersecurity threats to the financial sector are evolving at an unprecedented pace, with quantum computing emerging as a significant concern.
The fintech industry’s adoption of blockchain and distributed ledger technologies (DLT) has enhanced transparency and efficiency and exposed new vulnerabilities.
With their ability to break encryption algorithms, Quantum computers threaten digital assets and financial transactions.
In response, HSBC, a global banking and financial services leader, has partnered with Quantinuum, a quantum computing specialist, to pioneer quantum-secure technology for trading tokenized physical gold.
This collaboration significantly advances the safeguarding of digital assets against future quantum threats.
The successful trial of quantum-safe cryptography for tokenized gold trading demonstrates a proactive approach to cybersecurity in finance.
It addresses the ‘store now, decrypt later’ risk, in which data stolen today could be decrypted by future quantum computers.
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This innovation sets new standards for protecting digital assets and maintaining trust in the evolving financial ecosystem.
HSBC pioneering quantum-safe security in digital asset trading
In 2023, HSBC became the first global bank to offer tokenized physical gold to institutional investors using DLT.
This system uses a decentralized digital network to record transactions across multiple computers, enhancing security and transparency.
Philip Intallura, Global Head of Quantum Technologies at HSBC, explains: “HSBC was the first international bank to offer tokenized physical gold and is now building on that innovation with cutting-edge cybersecurity protection for the future.”
Building on this initiative, HSBC expanded its offering this year with the launch of the HSBC Gold Token for retail investors in Hong Kong. This token enables fractional ownership of physical gold and democratizes access to this asset class.
Quantum-safe technology: the next frontier in cybersecurity
As part of the trial, HSBC tested the interoperability of its gold tokens using post-quantum cryptography (PQC).
This set of cryptographic algorithms is designed to withstand attacks by quantum computers, which are expected to render many current encryption methods obsolete.
The bank demonstrated the ability to convert its gold tokens into ERC-20 fungible tokens, a technical standard for tokens on the Ethereum blockchain.
This conversion enhances the tokens’ utility and interoperability within the broader digital asset ecosystem.
Quantinuum employed PQC algorithms and its proprietary Quantum Origin quantum randomness technology to showcase comprehensive protection of digital assets from quantum computing attacks.
Addressing the ‘store now, decrypt-later’ threat
The trial also addressed the threat of “store now, decrypt later” (SNDL) cyber incidents.
This technique involves malicious actors stealing sensitive data to decrypt it later using powerful quantum computers that do not yet exist.
Philip notes: “By addressing SNDL threats, we’re not just preparing for the future; we’re actively shaping it. This breakthrough demonstrates that we can future-proof our digital asset offerings against potential quantum computing threats.”
Implications for cybersecurity in financial services
The successful trial of quantum-safe technology for tokenized gold trading has significant implications for cybersecurity in financial services.
As digital assets become increasingly mainstream, robust security measures that can withstand future technological advancements are crucial.
Integrating quantum-safe technology with tokenized assets opens up new possibilities for cross-platform interoperability.
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This could lead to more efficient and secure trading of digital assets across different blockchain networks and traditional financial systems.
As quantum technology advances, the ability to protect digital assets from current and future threats will likely become a key differentiator for financial institutions in their cybersecurity strategies.
Philip concludes: “By combining tokenized assets with quantum-safe technology, we’re creating a new digital finance standard for security and innovation.
“This isn’t just about protecting assets; it’s about building trust in the digital financial ecosystem of the future.”
Ilyas Khan, Quantinuum founder, and Chief Product Officer, elaborates: “As long-time partners in exploring commercial quantum applications, HSBC and Quantinuum are together building the next generation of financial services featuring quantum-hardened defenses harnessing the power of today’s quantum computers to safeguard sensitive data now and into the future.”​​​​​​​
