Coinbase Readies Custody for Future Quantum Threat

Coinbase announced on July 23 that future fault‑tolerant quantum computers could eventually defeat the cryptography that secures major blockchains. The company said the timeline for such machines is uncertain and that replacing vulnerable cryptography across networks could take years.

Jeff Lunglhofer, Coinbase’s chief information security officer, wrote that the company’s Independent Advisory Board on Quantum Computing and Blockchain has high confidence a capable quantum computer will be built, though no one knows when. “A large‑scale quantum computer capable of breaking current cryptography will eventually be built. No one knows exactly when,” he wrote.

Coinbase is developing a post‑quantum version of its CoreKMS key management system, which today protects about 99.9% of assets it holds in custody. The existing CoreKMS uses multiparty computation, which splits control of private keys so no single party can reconstruct them. Within a year the company expects to introduce an automated signing system that combines secure enclaves, secret sharing and threshold cryptography to support multiple post‑quantum signature algorithms. Over the following two to three years, engineers plan to expand MPC capabilities to handle lattice‑based and other post‑quantum signing schemes.

The firm is cataloging cryptography across its infrastructure, including systems that protect customer data and user authentication. Each system will be ranked by importance, exposure and difficulty of migration to guide replacement and upgrades.

Coinbase said it will coordinate industry work on Bitcoin migration strategies. It will co‑host a working session at Stanford in August that will bring together Bitcoin Core developers, cryptographers and researchers to examine technical challenges and migration options. Coinbase is a founding member of the Bitcoin Security Consortium, which launched an industry initiative totaling $15 million to support open‑source developers researching Bitcoin’s long‑term security. The company plans to donate to developers and assign engineers to open‑source projects, including proposals such as BIP‑360.

Coinbase referenced federal planning as context for its efforts. In June 2026, the National Institute of Standards and Technology released draft updates to federal post‑quantum cryptography standards that incorporate newly standardized quantum‑resistant algorithms for identity verification and authentication. The revisions are intended to help agencies and industry adopt quantum‑resistant technologies while preserving interoperability.

The company noted that moving millions of users and replacing cryptographic methods across global systems will take years and requires coordination among researchers, developers, protocol teams and companies. The blog post added that early preparation is needed rather than waiting until the threat becomes urgent.