Hong Kong Banking Sector Boosts Quantum Readiness Amid Tokenization Drive

The Hong Kong Monetary Authority (HKMA) has taken a significant step to fortify the financial sector's resilience against evolving cybersecurity risks stemming from the increasing adoption of tokenized assets and distributed ledger technologies. The authority announced the launch of a comprehensive framework to assess banks' preparedness for quantum computing threats, along with the sector's inaugural Quantum Preparedness Index (QPI). The HKMA aims to achieve full readiness for the banking sector against these next-generation threats by 2030, as Hong Kong continues its efforts to position itself as a leading digital asset hub.

This strategic move was concretized with the white paper on quantum preparedness released by the HKMA on Monday, alongside the QPI. The initial assessment revealed a sector-wide readiness score of only 2.3 out of 10 for Hong Kong's banking sector. A survey conducted found that approximately half of the institutions surveyed had no formal post-quantum cryptography (PQC) planning in place. The HKMA urged banks to commence inventories, risk assessments, and migration planning immediately, considering that replacing cryptographic systems can take years.

Hong Kong's determined efforts to transition more traditional financial activities onto distributed ledgers further underscore the urgency of these new security concerns. Government figures indicate that Hong Kong has issued three batches of tokenized green bonds totaling approximately HK$16.8 billion (about US$2.1 billion) since 2023. Furthermore, the HKMA is advancing tokenized deposits and digital asset settlement through Project Ensemble. In February 2026, Hong Kong Financial Secretary Paul Chan stated that digital assets under custody in banks exceeded HK$14 billion (approximately US$1.785 billion) by the end of 2025, marking an increase of about 180% year-over-year, while tokenized deposits reached HK$29 billion (US$3.7 billion).

Quantum computers, with their potential to run Shor's algorithm at scale, could eventually break widely used encryption methods such as RSA and elliptic-curve cryptography. This could enable malicious actors to decrypt protected data or forge digital signatures used to authorize transactions, verify identities, and establish trust in financial systems. The HKMA's white paper emphasizes that distributed ledger applications and payment networks rely on cryptography for core functions and could face severe disruption if these protections are compromised.

This quantum initiative is part of the HKMA's Fintech 2030 strategy, launched in 2025, which has made tokenization one of its four strategic pillars within a plan comprising over 40 initiatives. The regulator aims to accelerate real-world asset (RWA) tokenization, regularize tokenized government bond issuance, and explore blockchain-based settlement supported by e-HKD, tokenized deposits, and regulated stablecoins. To support this transition, the HKMA will collaborate with the Hong Kong University of Science and Technology and industry participants to develop a Post-Quantum Cryptography (PQC) toolkit and conduct training workshops for banks.

Analysts and market experts view the HKMA's early and proactive approach as a significant example for global financial systems. Other regulators, such as the Monetary Authority of Singapore (MAS) and the European Central Bank (ECB), have also begun prioritizing post-quantum cryptography readiness. To achieve its 2030 target, Hong Kong's banking sector is expected to enhance awareness, strengthen planning, and expand pilot implementations. These steps will solidify the city's position as a digital finance hub while ensuring its resilience against future cyber threats.