Coinbase designs post‑quantum custody system to protect institutional assets

Coinbase announced that it is engineering a post‑quantum custody solution capable of handling any new signature algorithm that Bitcoin or other blockchains may adopt. The effort targets the protection of about $250 billion in assets held for institutional clients.

Why a new custody design is needed

Most large custodians rely on Multi‑Party Computation (MPC) to split private keys among several parties. Many post‑quantum signature schemes, especially hash‑based designs, do not fit the arithmetic structure required for MPC, creating a compatibility gap.

Exploring multiple technical paths

Coinbase is preparing for several possible outcomes:

• Support for signature schemes that can be integrated with MPC, such as ML‑DSA, which is part of the NIST FIPS 204 standard.
• A fallback architecture using programmable Hardware Security Modules (HSMs) that would store encrypted keys and assemble them only inside a secure hardware enclave, allowing use of signatures that cannot be split.

Advisory board and research

The company’s quantum‑computing advisory board, formed in January, includes cryptographers and researchers from academia and industry. The board evaluates quantum developments and advises on technical roadmaps, including changes to Bitcoin address handling and internal key‑management systems.

Industry context

Other custodians are also testing quantum‑safe approaches. In June, BitGo ran a simulation of quantum‑safe MPC using an ML‑DSA‑based protocol. Meanwhile, Bitcoin developers have not yet selected a post‑quantum signature standard, leaving custodians to prepare for multiple possibilities.

Implications for institutional investors

Coinbase’s custodial platform secures assets for clients such as BlackRock and holds a large share of assets underlying U.S. spot Bitcoin and Ethereum ETFs. The ability to support any future signature scheme could become critical if a blockchain used by regulated funds adopts new cryptography.