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Quantum computing is often discussed as a distant, theoretical threat to financial security. Hong Kong’s central bank just made it concrete, and the numbers it published are not reassuring.
The Hong Kong Monetary Authority released a white paper on quantum preparedness on Monday, alongside what it calls the sector’s first Quantum Preparedness Index. The index gave Hong Kong’s banking sector an overall readiness score of 2.3 out of 10. Roughly half of the institutions surveyed had no formal post-quantum planning in place at all. The HKMA has set a target of a perfect score of 10 by 2030, which means the industry has a long way to travel in a short time, and the stakes are rising with every tokenized bond it issues.
Why Tokenization Makes the Quantum Problem Urgent
The timing of this initiative is not coincidental. Hong Kong has been aggressively moving traditional financial activity onto distributed ledgers. Since 2023, the government has issued three batches of tokenized green bonds totalling approximately HK$16.8 billion, equivalent to around US$2.1 billion. The HKMA is simultaneously advancing tokenized deposits and digital-asset settlement through its Project Ensemble initiative. By the end of 2025, banks in Hong Kong held more than HK$14 billion in digital assets under custody, a figure that represents roughly 180% year-on-year growth, according to a February 11, 2026 speech by Financial Secretary Paul Chan. Tokenized deposits alone had reached HK$29 billion.
All of that value rests on cryptographic foundations. Distributed ledger applications and payment networks use cryptography for core functions including transaction authorization, identity verification, and the establishment of trust between counterparties. The HKMA white paper states plainly that if those protections were compromised, severe disruption would follow.
The specific mechanism the regulator is worried about is Shor’s algorithm. A quantum computer running Shor’s algorithm at sufficient scale could break both RSA encryption and elliptic-curve cryptography, the two standards that underpin most of today’s digital financial infrastructure. An attacker with that capability could decrypt protected data or forge the digital signatures used to authorize transactions. In a tokenized financial system, forged signatures do not just mean stolen passwords. They mean fraudulent asset transfers that look, to every system checking them, entirely legitimate.
The Migration Problem Is Already Overdue
The HKMA’s concern is not simply that quantum computers will eventually become powerful enough to do this. The concern is that replacing embedded cryptographic systems takes years, and institutions that wait until the threat is imminent will not have enough time to respond. The regulator is urging banks to begin cryptographic inventories, conduct risk assessments, and start migration planning now, before fault-tolerant quantum machines are commercially available.
The white paper does point to some early progress. One surveyed institution completed a proof of concept applying post-quantum cryptography to distributed-ledger connectivity. HSBC used quantum-safe technology in 2024 to move tokenized gold across distributed ledgers, a real-world test that the HKMA cited as a model. These are meaningful steps, but they are isolated examples in a sector that, by the regulator’s own scoring, has barely started the journey.
The quantum initiative sits within a broader strategic context. The HKMA launched its Fintech 2030 strategy in 2025, naming tokenization as one of four strategic pillars across more than 40 initiatives. The plan includes accelerating real-world asset tokenization, regularizing tokenized government bond issuance, exploring tokenized Exchange Fund papers, and building out blockchain settlement infrastructure supported by e-HKD, tokenized deposits, and regulated stablecoins. Quantum preparedness is, in effect, the security layer that the entire Fintech 2030 architecture depends on.
What This Means Beyond Hong Kong
For investors and institutions in Malaysia and Singapore watching Hong Kong’s tokenization experiment, the HKMA’s findings carry a direct lesson. Both countries are pursuing their own digital-asset and tokenization agendas. Bank Negara Malaysia and the Securities Commission have been developing frameworks for digital assets, while the Monetary Authority of Singapore has been running its own tokenization pilots under Project Guardian. None of these initiatives can be considered secure in the long run if the cryptographic infrastructure beneath them is not upgraded to withstand quantum attacks.
The HKMA’s Quantum Preparedness Index gives regulators in the region a concrete benchmark to consider adopting. A score of 2.3 out of 10 is a useful, honest starting point precisely because it is embarrassingly low. It creates accountability. It tells the industry that the regulator is measuring, not just advising.
The deeper point is this: the race to tokenize real-world assets is accelerating across Asia, and the security assumptions baked into that infrastructure were designed for a pre-quantum world. Hong Kong has at least begun to measure the gap between where its banks are and where they need to be. The question for every other financial centre in the region is whether they have even started asking the question.
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