As tokenization expands, Hong Kong prepares banks for quantum risk

The Hong Kong Monetary Authority released the Quantum Readiness Index to promote the banking industry to deal with quantum computing risks.

The Hong Kong Monetary Authority (HKMA) has recently taken measures to strengthen the city's financial system to cope with the long-term risks posed by quantum computing. In a newly released white paper, the regulator has launched a first-of-its-kind "Quantum Readiness Index"(QPI), which aims to measure banks 'readiness to respond to possible threats to the cryptographic technology on which digital payments, tokenized deposits and blockchain-based clearing houses rely.

According to the Hong Kong Monetary Authority, the industry's overall Quantum Readiness Index score is currently 2.3 points (out of 10 points). The white paper also found that about half of the institutions surveyed had not yet formulated formal post-quantum plans. The Hong Kong Monetary Authority said its goal is to achieve full industry-wide readiness by 2030, that is, a quantum readiness index of 10 points.

Core Points

The Hong Kong Monetary Authority's first-ever Quantum Reserve Index puts the banking industry score at 2.3/10, indicating limited maturity in post-quantum planning. About half of the institutions surveyed reportedly lack formal post-quantum cryptographic migration plans. Regulators have linked quantum risk directly to the cryptographic technology used in distributed ledgers and payment networks, warning that if safeguards fail, serious disruption could occur. The Hong Kong Monetary Authority aims to have banks "fully ready" by 2030 and emphasizes the need for immediate actions, such as establishing asset lists and developing migration plans.

Why Hong Kong's tokenization agenda increases quantum risk

The launch of the Quantum Initiative by the Hong Kong Monetary Authority comes as Hong Kong deepens the integration of traditional finance and distributed ledger technology. Regulators 'broader push includes efforts to tokenize assets and expand the digital settlement track-areas that rely heavily on cryptographic security to ensure confidentiality, identity verification and transaction integrity. Government data cited in relevant reports shows that since 2023, Hong Kong has issued three batches of tokenized green bonds, totaling approximately HK$16.8 billion (approximately US$2.1 billion). At the same time, the Hong Kong Monetary Authority continues to promote the settlement of tokenized deposits and digital assets through the "Ensemble Project", which aims to explore how tokenized currencies and assets can flow and be settled on distributed ledgers.

In fact, the more value is represented, transferred and authorized on a cryptographically protected network, the more serious the consequences will be once the underlying encryption or signature scheme is ultimately weakened by quantum capabilities.

The Hong Kong Monetary Authority's Quantum Readiness Framework

In Monday's announcement, the Hong Kong Monetary Authority also released a white paper on quantum readiness and the industry's first quantum readiness index. The central view of regulators is that the core functions of modern distributed ledger applications and payment networks rely on cryptography, which means that compromised cryptography can lead to a crisis of operations and trust in the financial services sector.

The Hong Kong Monetary Authority's white paper points out that quantum computers capable of running Shoor's algorithm on a large scale may crack widely used public key cryptography, such as RSA and elliptic curve cryptography. Regulators have warned that this could lead attackers to decrypt protected data or forge digital signatures used to authorize transactions, verify identities and support trust in the financial system.

Because cryptographic systems can be deeply embedded in hardware, software and operational processes, and replacement can take years, the Hong Kong Monetary Authority is effectively pushing banks to view post-quantum migration as a multi-year plan rather than a final emergency upgrade. Regulators urge agencies to start building asset inventories, conducting risk assessments and developing migration plans as early as possible before quantum capabilities become an actual threat.

What does a quantum readiness index score mean-what banks must do next

The gap between expected goals and current readiness levels is obvious. The Quantum Readiness Index has a total score of 2.3 out of 10, which suggests that many institutions may not have yet translated quantum risks into specific governance measures, technology roadmaps, and alternative strategies for the cryptographic technologies used in their systems.

The HKMA's survey also highlighted planning deficiencies: About half of the institutions surveyed reportedly had no formal post-quantum planning. This is crucial because preparation is not just about selecting alternative cryptographic algorithms. Banks also need to sort out where current cryptographic methods are used in their infrastructure, assess chains of dependence in distributed ledger connectivity and settlement workflows, and ensure upgrades do not undermine operational continuity.

Although the overall situation is cautious, the Hong Kong Monetary Authority pointed out that at least one institution under investigation has completed a proof-of-concept application of post-quantum cryptography to distributed ledger connections. The white paper also mentions the case of HSBC using quantum security technology to transfer tokenized gold across distributed ledgers in 2024-this example shows that quantum resilience work can be reflected in actual settlement experiments rather than just theoretical level.

Still, the Hong Kong Monetary Authority's score suggests that these efforts are not yet broad enough to improve the industry average. The practical lesson for investors and market participants is that as Hong Kong expands the scale of tokenized products and distributed settlement services, compliance, system readiness and operational risk management surrounding cryptographic technology may become increasingly important.

Hong Kong's larger timetable: tokenization first, cryptographic upgrade later

The Hong Kong Monetary Authority has placed quantum readiness promotion efforts within its broader strategy to expand fintech and tokenized finance. Regulators have previously outlined the "FinTech 2030" strategy in 2025, in which tokenization has been identified as a strategic pillar in the plan covering more than 40 initiatives. This approach includes accelerating the tokenization of real-world assets (RWA), regulating tokenized government bond issuance, exploring tokenized foreign exchange fund notes, and blockchain settlement supported by mechanisms such as e-Hong Kong dollars, tokenized deposits, and regulated stablecoins.

Hong Kong Financial Secretary Paul Chan also provided relevant background information in a speech. He said that as of the end of 2025, the digital assets held by banks exceeded HK$14 billion, a year-on-year increase of approximately 180%, while tokenized deposits have reached HK$29 billion. These numbers highlight the rapid growth of tokenization-related activity, even though cryptographic migration planning is still in its early stages.

This combination-the rapid adoption of a tokenization trajectory while being recognized as lacking in post-quantum readiness-helps explain why the Hong Kong Monetary Authority's framework was designed as a measurable readiness plan with a target for 2030.

The key question for readers focusing on this area is how the Hong Kong Monetary Authority will translate the Quantum Readiness Index into practical action: whether institutions will formally develop post-quantum migration plans on a large scale, and as tokenized settlements continue to expand, how quickly banks will move from proof-of-concept work to system-wide asset lists and upgrade roadmaps.