Quantum Computers Set to Break Financial Encryption: US and UN Begin Transition to 'Quantum Security'

The US NSA is pushing for the implementation of quantum-resistant encryption in new national security systems starting in 2027.

The UN pension fund is also reviewing the protection of blockchain records, stating that "even stored data is at risk."

Concerns arise over attacks that could "steal now and decrypt later," prompting a rapid transition in security and regulations within the financial sector.

[Block Media Reporter Lee Hye-yeon] While predictions on the exact timeline for quantum computers to undermine current encryption systems vary, governments and financial institutions are already taking action. The belief is that it may be too late to change security systems once quantum computers are commercially available.

On the 2nd of this month (local time), a discussion was held at the UN Headquarters in New York during the Government Blockchain Association's (GBA) event titled "Future of Money, Governance and the Law," focusing on the risks quantum computing poses to financial systems and regulatory responses.

US NSA Activates Transition Clock: 'Quantum-Resistant Encryption' to Be Implemented from 2027

Quantum computers are gaining attention because they could threaten the encryption technologies currently used in financial and communication systems. There are concerns that once sufficiently powerful quantum computers emerge, some public key encryption systems that are currently nearly impossible to break could be compromised.

In response, the US National Security Agency (NSA) is promoting a transition to a 'Post-Quantum Cryptography (PQC)' framework. The new national security systems being introduced from 2027 must support algorithms that can withstand quantum attacks, with incompatible systems being phased out starting in 2030.

The issue is that threats could begin even before powerful quantum computers become available. A typical attack involves an adversary stealing encrypted data now and storing it, then decrypting it later when quantum computers have advanced enough, known as the "Harvest Now, Decrypt Later" attack.

The US National Institute of Standards and Technology (NIST) is also recommending that organizations and companies transition to already established post-quantum encryption standards without waiting for the emergence of powerful quantum computers.

UN Pension Fund Also Begins Response: "What About Already Recorded Information?"

The discussion included Brian McGlynn, Dottie Romo, Chief Risk and Compliance Officer of the IRS, Dino Cataldo Della Chio, Deputy CEO of the UN Joint Staff Pension Fund (UNJSPF), and Julius Moyer from Mastercard.

Della Chio explained that responding to quantum computing has already become a practical challenge for the UN pension fund.

The UN pension fund operates a blockchain-based "Proof of Life" system for approximately 80,000 beneficiaries across 190 countries. This system digitally verifies that pension recipients are alive to support the pension payment process.

This system has been in actual operation for about five years. However, if the encryption technology currently in use becomes vulnerable to future quantum computers, a new problem arises regarding how to protect records that have been stored on the blockchain since the past.

In response, the UN pension fund is considering measures to protect existing records with new encryption methods and to publicly verify the integrity of those records using blockchain technology that can withstand quantum attacks.

Della Chio emphasized that the security threat posed by quantum computing should not be viewed as a one-time issue like the past 'Y2K (Millennium Bug).' It is not a problem that can be resolved by upgrading systems all at once based on a specific date.

He stated, "There is no specific date like Y2K in the quantum field," adding, "As threats continue to evolve, encryption technologies must be continuously monitored."

He also pointed out that the transition to quantum-resistant encryption systems is not merely a matter of changing software. The key sizes used in new encryption methods may be significantly larger than existing ones, necessitating upgrades to firewalls, network equipment, and various software across existing IT infrastructure.

"Existing Regulatory Speed Cannot Keep Up": Challenges in Financial Sector Response Speed

The speed of regulatory responses from financial authorities has also been identified as a challenge. Dottie Romo from the IRS pointed out that the existing regulatory review process may be too slow compared to the pace of technological advancements.

Romo stated, "Currently, we are reviewing matters at a very traditional pace," adding, "This approach will not be sustainable in the future."

It remains uncertain when quantum computers will actually reach a level that threatens the encryption systems of existing financial systems. However, given the long lifespan of the data that financial institutions must protect and the possibility that already stolen information could be decrypted in the future, there are calls to avoid delaying the response until after the commercialization of quantum computers.

Ultimately, the challenge for the financial sector is not just to predict when 'Q-Day' will arrive. The key issue for future financial security is how quickly and reliably systems and data can be transitioned to quantum-resistant systems before existing encryption systems become vulnerable.