Coinbase Preps Post-Quantum Custody With HSM Fallback — SkimNews
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- Coinbase is developing post-quantum custody safeguards built to support any signature scheme Bitcoin or other chains may adopt, according to Head of Cryptography Yehula Lindell on MARA Foundation TV.
- Multi-Party Computation may not survive the transition to post-quantum cryptography because hash-based signature schemes lack the arithmetic structure that lets parties split a private key into shares.
- Coinbase safeguards roughly $250 billion in assets for institutional clients including BlackRock, and is now designing custody architecture to be agnostic to whichever signing scheme blockchains ultimately adopt.
- Coinbase is researching a fallback that would encrypt private keys with post-quantum cryptography and assemble them only inside programmable Hardware Security Modules — physically secure vaults inside private data centers.
- Lindell acknowledged that keeping a complete key in one place is theoretically less secure than MPC but said HSM side-channel protections and code-upload controls make him comfortable with the arrangement.
- Dan Boneh and other cryptographers are actively researching MPC-compatible hash-based signature schemes, detailed in the recent "PRAWNS" paper, though the work remains highly experimental.
- Ledger CTO Charles Guillemet has separately raised concerns about hash-based signatures, underscoring industry-wide uncertainty about which post-quantum approach will prove viable.
Why it matters: Coinbase holds roughly $250 billion in institutional assets and cannot afford a custody gap if quantum computing renders today's signature schemes obsolete. By pre-building an HSM-based fallback now, the exchange protects its institutional book from a future forced migration to a post-quantum scheme that breaks MPC — a risk that wallet makers like Ledger are already flagging.
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