Petition for Immediate Action to Safeguard Digital Assets in ETFs from Quantum Threats

To policymakers, regulatory bodies, financial institutions, and ETF stakeholders:

We are at the cusp of an unprecedented technological transition that poses an existential threat to the security of digital assets and the stability of our financial markets. With the rapid development of quantum computing, the cryptographic algorithms protecting digital assets—including those listed in Exchange-Traded Funds (ETFs)—are at imminent risk. Quantum computers have the capability to break the cryptographic underpinnings of Elliptic Curve Digital Signature Algorithm (ECDSA) and other foundational encryption methods currently in use, rendering them obsolete and vulnerable within the next five years or less.

The Quantum Threat: Forecasts and Implications

1.  Quantum Computing Progress: Recent advancements suggest that quantum computers capable of compromising existing cryptographic protocols could emerge within five years, if not sooner. Conservative estimates from researchers and industry experts place the timeline for a “Quantum Threat” between 3 to 5 years. This brief window underscores the urgency of securing digital assets against quantum attacks today.
   
   
2. Risks to ECDSA and Digital Assets: The overwhelming majority of digital assets in ETFs and other financial products are secured by ECDSA and similar algorithms. Quantum computers with sufficient power would obliterate the security assurances of ECDSA, making it feasible for attackers to forge transactions, steal assets, and disrupt markets. This risk extends to a wide range of assets, from cryptocurrencies to tokenized securities, whose vulnerability could lead to cascading effects across financial markets.
   
   
3. Financial Market Stability: The fallout from a large-scale quantum attack on digital assets would not be confined to individual investors or even ETFs. The very credibility of the financial system could be compromised, leading to mass financial instability and a crisis of trust. Investors depend on the security and reliability of their digital assets, and a breach in cryptographic integrity would fundamentally undermine confidence in these products.

Why Act Now? The Necessity for Post-Quantum Cryptography

Transitioning to post-quantum cryptography is not a simple, rapid, or frictionless process. It is a complex undertaking requiring coordination among governments, regulatory bodies, and private sector entities across global markets. Given this complexity, it is critical to begin this transition now.

1. Slow Adoption Cycles: Historically, cryptographic transitions have taken years, if not decades. Industry shifts, like those from SHA-1 to SHA-256 or RSA to ECDSA, have often taken over a decade to implement fully. Given the quantum threat, we do not have the luxury of waiting that long for a migration to post-quantum cryptographic standards.
   
   
2. Lack of Awareness and Resources: The migration to quantum-safe cryptography demands new standards, significant resources, and cross-industry coordination. Without immediate action and clear deadlines, we risk being unprepared for the impending wave of quantum-capable adversaries, leaving our financial markets vulnerable.
   
   
3. Rising Contention and Fragmentation: In the absence of clear regulatory deadlines, institutions are likely to pursue divergent strategies, leading to a fragmented response. To ensure a cohesive, unified approach, regulatory bodies must set deadlines, incentivize compliance, and establish clear pathways for the transition to quantum-safe cryptography.

Our Call to Action

We, the undersigned, call on policymakers, regulatory authorities, and financial institutions to establish a definitive deadline of no later than 2028 for all digital assets listed on ETFs to migrate to post-quantum cryptographic standards. Specifically:

1.  Mandate Quantum-Safe Standards for ETF Digital Assets: Establish regulations requiring all digital assets included in ETFs to adopt post-quantum cryptographic methods, starting immediately and concluding by 2028.
   
   
2. Develop a Quantum-Preparedness Framework: Financial regulators and policymakers must provide a roadmap for quantum-safe transition, prioritizing digital asset custodians, exchanges, and investment funds that hold these assets.
   
   
3. Incentivize Rapid Adoption and Innovation: We urge policymakers to incentivize the adoption of post-quantum cryptography by offering funding for research, tax breaks for compliant institutions, and penalties for non-compliance after the 2028 deadline.
   
   
4. Raise Public Awareness and Accountability: Transparency in the migration process is crucial to maintaining public trust. We call for annual reporting on progress toward post-quantum readiness, with clear metrics for compliance and milestones for accountability.
   
   

A Future at Stake

The time to act is now. Failing to transition to quantum-safe cryptography within the next five years would be a grave oversight with potentially catastrophic consequences for the financial sector, our economy, and the global digital ecosystem. A robust quantum threat is no longer a distant hypothetical—it is a near-term certainty. We cannot afford to delay.

We ask policymakers, financial institutions, and all stakeholders to support this petition and work together to meet the looming challenge of quantum security. Our digital assets, financial stability, and economic future depend on it.

Signatories:

Quantum-Safe Digital Asset Initiative