Coinbase Warns Crypto’s Protection Could Eventually Break
Crypto exchange Coinbase (Nasdaq: COIN) has started preparing its custody systems and infrastructure for a future in which powerful quantum computers could defeat the cryptography protecting Bitcoin, Ethereum and other blockchain networks.
Coinbase Chief Information Security Officer Jeff Lunglhofer outlined the company’s position in a July 23 company blog post:
“A large-scale quantum computer capable of breaking current cryptography will eventually be built. No one knows exactly when. But the work to prepare needs to start now, not when it’s urgent.”
The company said its Independent Advisory Board on Quantum Computing and Blockchain has high confidence that a fault-tolerant quantum computer will eventually be developed. Coinbase formed the board to assess long-term quantum risks facing digital assets, according to Coinbase’s quantum advisory board announcement.
“The cryptography that secures virtually every major blockchain is vulnerable when it arrives. The threat is not imminent, but the timeline is genuinely uncertain,” Lunglhofer added.
The warning does not suggest that quantum computers can currently defeat the cryptography securing major blockchains. Instead, Coinbase argues that upgrading global blockchain systems, moving millions of users and replacing vulnerable cryptographic methods could take years, making early preparation essential.
Industry Standards Are Already Shifting
Coinbase’s preparations align with broader cybersecurity efforts. In June 2026, the U.S. National Institute of Standards and Technology (NIST) released draft updates to federal post-quantum cryptography standards that incorporate newly standardized quantum-resistant algorithms for identity verification and authentication, underscoring that organizations should continue preparing for the transition to post-quantum security.
The proposed updates build on NIST’s wider effort to modernize cryptographic standards as quantum computing advances. The revisions are intended to help federal agencies and industry adopt quantum-resistant technologies while maintaining interoperability.
Coinbase Builds Quantum-Safe Custody System
Coinbase is developing PQ-CoreKMS, a post-quantum version of its proprietary key management system that protects approximately 99.9% of the assets it holds in custody. Its existing CoreKMS system relies on multiparty computation (MPC), which distributes control of private keys so that no single party can reconstruct a customer’s full key.
Within the next year, Coinbase plans to introduce an automated signing system that combines secure enclaves, secret sharing, and threshold cryptography, enabling support for multiple post-quantum signature algorithms as blockchain networks begin adopting them. Over the following two to three years, Coinbase researchers intend to expand MPC capabilities further to accommodate lattice-based and potentially other post-quantum signing schemes.
In parallel, the exchange is cataloging cryptography used across its infrastructure, including systems that protect customer data and authentication. Coinbase plans to rank each system according to its importance, exposure, and migration difficulty.
Bitcoin Security Push Requires Industry Cooperation
Coinbase will co-host a working session with Stanford in August for Bitcoin Core developers, researchers, and cryptographers. The group will examine potential migration strategies and the technical challenges involved in moving bitcoin to quantum-resistant security.
The crypto exchange is also a founding member of the Bitcoin Security Consortium, alongside companies including 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 efforts, including proposals such as BIP-360.
“No one company can solve this alone. The only way through is together: researchers, developers, protocols, and companies all moving in the same direction,” Lunglhofer concluded, emphasizing:
“The quantum future is coming, and the time to start preparing is now.”
