Private key security for digital asset custody in a post-quantum setting

Transactions on digital ledgers are authorized through digital signatures, making private key security a critical component of digital asset custody. For banks and financial institutions building custody, tokenization and settlement services, the cryptography protecting these keys faces a threat it was never designed to withstand.

The state of affairs today

The timeline for post-quantum readiness shifted significantly in 2026. In March, Google Quantum AI estimated that the cryptography securing Bitcoin and Ethereum could be broken with roughly twenty times fewer qubits than previously thought. In January, the G7 Cyber Expert Group outlined a roadmap for financial institutions to transition to post-quantum cryptography by 2035, with critical systems potentially moving as early as 2030.

Regulatory guidance is also establishing timelines for this transition. NIST will deprecate today's elliptic-curve cryptography in 2030 and disallow it in 2035. Switzerland's FINMA expects every institution it supervises to have a board-approved post-quantum roadmap by mid-2027. With these timelines approaching, continued reliance on vulnerable cryptographic systems presents long-term security and compliance concerns.

Large institutions can take ten to fifteen years to retire a cryptographic dependency. That means custody infrastructure deployed today may still be running when a capable quantum computer arrives.

The problem

Quantum risk is often summed up as "harvest now, decrypt later", where data recorded today could be decrypted once sufficiently powerful quantum computers become available. However, for digital asset custody, another critical risk is signature forgery. A future quantum computer could potentially derive private keys from exposed public keys, allowing attackers to authorize transactions without breaching the custody system or gaining insider access.

Because the same signing infrastructure increasingly serves custody, tokenized deposits, treasury and collateral, one weakness quickly becomes a shared one with ever increasing value of assets depending on it for security.

The lack of industry consensus on the path toward post-quantum security adds further complexity, as different digital ledgers and settlement systems may adopt different cryptographic approaches.

For institutions building custody infrastructure, the challenge is to address three requirements simultaneously: ensuring signatures remain secure against quantum attacks, preventing any single person or device from moving funds and continuing to support every ecosystem with which their customers wish to transact.

The solution

As cryptographic standards evolve, banks and financial institutions need infrastructure that can adapt to new security requirements. Cryptographic Agility allows financial institutions to update their security mechanisms as new standards and threats emerge. This need to adapt quickly is further amplified by the AI-orchestrated attacks that expose vulnerabilities in existing systems.

Silence Laboratories has demonstrated cryptographic agility in key management across three areas: Post-Quantum (PQ) Signature schemes, flexible configurations, and modularity.

Silence is at the forefront of scalable and future proof custody infrastructure, supporting current ECDSA and EdDSA keys. Additionally, we have also demonstrated PQ signing in production with BitGo using our ML-DSA libraries.

Solutions supporting other NIST-approved PQ signature schemes, solutions are already in the testing phase and will be launched in planned production releases. This positions Silence to continue developing and optimizing post-quantum custody infrastructure as cryptographic standards evolve.

Banks can choose configurations based on their operational and security requirements, from multi-HSM solutions protecting key high value accounts to fully embedded cloud-based Trusted Execution Environment (TEE) key management for fast performance applications such as payments and high frequency trading.

Lastly, the modularity of the Silence stack enables banks to choose to use their own governance, reporting, compliance and/or risk engines. With each block acting as its own lego piece.

Silence Laboratories is part of the Cosmos Partner Network, which brings together specialized firms to help financial institutions accelerate their tokenization and digital asset initiatives. For institutions prioritizing security, Cosmos provides production-proven digital ledger infrastructure, with 10 years of production resilience, supporting more than 200 digital ledgers globally.

Building on this foundation, the recent Cosmos Ledger Security 2026.1 release introduced the first native post-quantum secure key option to the Cosmos stack. The release supports ML-DSA signatures for both user accounts and consensus signing, alongside remote signing through hardware security modules (HSMs) and key management services (KMS).

These capabilities allow institutions to build new digital ledgers with post-quantum security in mind or progressively migrate existing networks. Silence Laboratories complements this infrastructure with its cryptographically agile custody stack, providing institutions with flexible key management configurations and controls.

Together, Cosmos and Silence Laboratories bring complementary capabilities to institutional digital asset infrastructure: digital ledger technology with native post-quantum signature support, adaptable custody that keeps up with changing demands and flexibility to use current governance and risk management systems. This allows financial institutions to strengthen their security architecture while preparing for evolving cryptographic standards.