EU supervisors warn quantum risks to crypto

• European Supervisory Authorities have warned quantum computing could undermine cryptography protecting financial systems and blockchains.
• The ESAs also flagged rising cyber risks, AI-enabled attacks and dependence on non-EU technology providers.
• Supervisors urged financial firms to strengthen preparedness for emerging technology and infrastructure risks.

The European Supervisory Authorities have warned quantum computing could undermine cryptography protecting financial systems and blockchains.

The EBA, EIOPA and ESMA identified emerging technologies, external dependencies and private credit as key EU financial vulnerabilities.

The authorities said quantum computing could transform financial processes, fraud monitoring, compliance and pricing.

However, quantum systems could also weaken cryptographic systems securing communications, transactions, databases and blockchains.

The ESAs warned these risks could materialise before commercially viable quantum applications become widespread.

Advanced artificial intelligence could also strengthen cyberattacks by helping malicious actors identify and exploit vulnerabilities faster.

The authorities also highlighted growing reliance on non-European Economic Area technology providers and financial infrastructure.

The update calls on supervisors and market participants to strengthen preparedness for AI, quantum computing and external dependencies.