Coinbase Prepares Custody for Quantum Computer Threat

Coinbase is overhauling its custody systems to withstand a future quantum computer that could break the cryptography protecting Bitcoin and Ethereum, the exchange said in a July 23 blog post. Chief Information Security Officer Jeff Lunglhofer wrote that a large-scale quantum computer capable of breaking current cryptography will eventually be built.

"No one knows exactly when. The work to prepare needs to start now, not when it's urgent," Lunglhofer said. The cryptography that secures virtually every major blockchain is vulnerable when that computer arrives, he added. The threat is not imminent. The timeline is genuinely uncertain.

Coinbase formed an independent advisory board on quantum computing and blockchain to assess long-term risks. The board has high confidence that a fault-tolerant quantum computer will eventually be developed, according to Coinbase's announcement.

The exchange is developing PQ-CoreKMS, a post-quantum version of its key management system that protects about 99.9% of assets it holds in custody. The existing system relies on multiparty computation (MPC), which distributes private key control so no single party can reconstruct a customer's full key. The post-quantum version will incorporate quantum-resistant algorithms to replace vulnerable elliptic curve cryptography.

Within the next year, Coinbase plans to introduce an automated signing system that combines secure enclaves and threshold cryptography. The system will support multiple post-quantum signature algorithms as blockchain networks begin adopting them. Over the following two to three years, researchers intend to expand MPC capabilities to accommodate lattice-based and other post-quantum signing schemes. Lattice-based cryptography is a leading candidate for post-quantum security because it resists quantum attacks.

In parallel, Coinbase is cataloging cryptography used across its infrastructure, including systems that protect customer data and authentication. The company plans to rank each system by importance and migration difficulty. That ranking will help prioritize which systems to upgrade first.

In June 2026, the U.S. National Institute of Standards and Technology released draft updates to federal post-quantum cryptography standards. The revisions incorporate newly standardized quantum-resistant algorithms for identity verification and authentication. NIST said organizations should continue preparing for the transition. The proposed updates build on NIST's wider effort to modernize cryptographic standards with quantum computing advancing, the agency said.

In August, Coinbase will co-host a working session with Stanford for Bitcoin Core developers, researchers and cryptographers. The group will examine migration strategies and technical challenges involved in moving bitcoin to quantum-resistant security. The session is part of broader efforts to secure the crypto market against future threats.

Coinbase is a founding member of the Bitcoin Security Consortium alongside BlackRock, Fidelity Digital Assets, Block, Blockstream and Strategy. The consortium launched with a $15 million industry initiative to support open-source developers researching Bitcoin's long-term security. Coinbase said it will also donate to developers working on quantum-related security and assign its engineers to open-source proposals such as BIP-360, which proposes quantum-resistant signatures for Bitcoin.

"No single company can solve this alone. The only way through is together: researchers, developers, protocols, and companies all moving in the same direction," Lunglhofer said. The quantum future is coming, and the time to start preparing is now, he said.

Galaxy Digital said Bitcoin whales have not identified quantum computing risks as a reason for selling.

Coinbase's Alpha Score is 29 out of 100, placing it in the Weak category among Financials stocks, according to AlphaScala's proprietary model. See the COIN stock page for details.

The Stanford working session is scheduled for August.