The financial world must prepare for the disruptive potential of quantum computing, which could render current cryptographic security obsolete.
This was the core message from SEBI chief Tuhin Kanta Landey, who explained that the rise of quantum computers, an area of significant global research, poses a fundamental threat to traditional encryption.
The most vulnerable systems will be those using older cryptographic standards, which could be easily broken by quantum computing power.
The situation is likened to the Y2K scare, where a major, pre-emptive change was needed to address a known, impending technical vulnerability. In the same way, the traditional cryptography used for passwords, regardless of the encryption level, will be rendered insecure by quantum computers.
This poses an immediate risk to the security of financial transactions and sensitive data. The first to be affected, he noted, would be crypto-assets, as their security is intrinsically tied to cryptography.
To combat this emerging threat, the financial sector must prepare to transition to new, quantum-resistant security standards. This includes adopting Post-Quantum Cryptography (PQC) and Quantum Key Distribution (QKD).
PQC refers to new cryptographic algorithms designed to withstand attacks from quantum computers, while QKD is a secure communication method that uses the principles of quantum mechanics to generate and distribute cryptographic keys.
For SEBI-regulated entities, this is not a distant threat but a present imperative, with new frameworks and deadlines in place for adopting these technologies.
The industry will have to systematically audit all its systems to identify where traditional cryptographic standards have been used and then replace them. This will be a gradual, phased process to ensure a secure transition.
The Ministry of Electronics and Information Technology (MeitY) and the Indian Computer Emergency Response Team (CERT-In) have already launched a whitepaper to guide India’s transition towards a quantum-safe cybersecurity infrastructure, recognizing the urgent need to protect national digital and financial infrastructure.
Ultimately, the message is one of proactive preparedness. While quantum computing offers opportunities for technological advancement, it also presents significant risks that the securities market must address head-on.
By adopting quantum-safe solutions now, India’s financial institutions can avoid future breaches, ensure regulatory compliance, and reinforce client trust, leading the way in securing the country’s digital economy for the future.
