Hong Kong Banks Score 2.3/10 on Quantum Readiness Amid Tokenization Surge

Woofun AI reports that the Hong Kong Monetary Authority (HKMA) has unveiled a strategic framework to evaluate banking sector resilience against quantum-computing threats, coinciding with an aggressive expansion of tokenized deposits, digital assets, and blockchain settlement infrastructure. On Monday, the regulator released a white paper alongside the industry’s inaugural Quantum Preparedness Index (QPI), establishing a baseline for cryptographic security in an era where distributed ledgers are increasingly central to financial operations.

The initial assessment results expose a significant security gap within the local banking sector. The QPI assigned an overall readiness score of just 2.3 out of 10, indicating minimal preparedness for post-quantum cryptographic standards.

Notably, the white paper revealed that around half of the surveyed institutions currently lack any formal post-quantum planning. This deficiency stands in stark contrast to the HKMA’s ambitious target of achieving a perfect QPI score of 10 by 2030, a benchmark representing full sector-wide readiness against advanced computational threats.

This urgency is driven by the rapid acceleration of asset tokenization across Hong Kong’s financial landscape. Government data indicates that three batches of tokenized green bonds, totaling approximately HK$16.8 billion (about $2.1 billion), have been issued since 2023. Simultaneously, the HKMA is advancing Project Ensemble, a critical initiative designed to facilitate tokenized deposits and digital-asset settlement using distributed ledgers. The structural shift toward these technologies increases the surface area for potential cryptographic attacks, making security protocols more vital than ever.

The technical risks are compounded by the deep reliance of distributed ledger applications and payment networks on traditional cryptography for core functions. The HKMA white paper warns that compromised protections could cause severe disruption to these systems.

However, early adoption efforts are emerging; one surveyed institution completed a proof of concept applying post-quantum cryptography to distributed-ledger connectivity.

Additionally, HSBC demonstrated practical application in 2024 by utilizing quantum-safe technology to transfer tokenized gold across distributed ledgers, signaling a gradual industry pivot toward secure architectures.

Structurally, this quantum initiative aligns with the broader Fintech 2030 strategy launched in 2025, which positions tokenization as one of four strategic pillars within a plan comprising more than 40 initiatives. The regulator intends to accelerate real-world asset (RWA) tokenization, regularize tokenized government bond issuance, and explore tokenized Exchange Fund papers, with settlement supported by e-HKD, tokenized deposits, and regulated stablecoins. Per Woofun AI, the scale of this transition is evident in recent custody figures: in a Feb. 11, 2026, speech, Financial Secretary Paul Chan noted that banks held over HK$14 billion (about $1.785 billion) in digital assets at the end of 2025, an 180% year-over-year increase, while tokenized deposits reached HK$29 billion ($3.7 billion).

The underlying threat stems from quantum computers capable of executing Shor’s algorithm at scale, which could break widely used RSA and elliptic-curve cryptography. Such capabilities would allow attackers to decrypt protected data, forge digital signatures, and compromise the mechanisms used to authorize transactions, verify identities, and establish trust. Because replacing embedded cryptographic systems is a multi-year process, the HKMA has urged banks to immediately begin inventories, risk assessments, and migration planning to mitigate these existential risks before quantum machines become operational.