Moody’s Warns Quantum Computing Could Accelerate Threats to Global Encryption Systems

Credit rating agency Moody’s warned that rapid advances in quantum computing could significantly increase risks to global cybersecurity systems, particularly if institutions fail to transition in time to quantum-resistant encryption technologies.

In a recent cybersecurity risk report, Moody’s said emerging research suggests that breaking widely used encryption standards may require far fewer quantum computing resources than previously estimated, raising concerns that existing digital security frameworks could become vulnerable sooner than expected.

The agency noted that recent technological developments indicate a potential acceleration in the timeline for quantum computers capable of undermining encryption systems used to protect financial, governmental, and personal data.

As a result, the risk that sensitive encrypted information could be exposed or decrypted in the future is becoming more immediate, rather than a distant theoretical concern.

Moody’s highlighted that major technology companies, including Google and Cloudflare, have already moved to accelerate their transition toward post-quantum cryptography, targeting full implementation by around 2029.

This timeline is significantly earlier than the U.S. government’s broader cybersecurity target of 2035 for securing federal systems against quantum threats, reflecting growing concern across the technology sector about the pace of quantum advancements.

The report warned that delaying the shift to quantum-resistant encryption could substantially increase implementation costs for companies, as late adopters may face more complex system overhauls and higher infrastructure replacement expenses.

Moody’s also noted that cybersecurity investments will increasingly compete with spending on artificial intelligence, potentially forcing companies to make difficult budget allocation decisions, given that security upgrades do not typically generate direct revenue growth.

The agency further cautioned that cyber threat actors are already collecting encrypted data today with the intention of decrypting it in the future once quantum capabilities mature — a strategy known as “harvest now, decrypt later.”

This approach could expose sensitive long-term data, even if current encryption standards remain secure in the short term.

Moody’s also flagged digital assets as particularly vulnerable to quantum risks, noting that ownership of cryptocurrencies relies heavily on cryptographic keys.

The report estimated that more than $3 trillion in digital assets could potentially be exposed if quantum computers eventually become capable of breaking current encryption mechanisms.

The agency concluded that financial institutions, banks, technology firms, and critical infrastructure operators must accelerate their transition to post-quantum encryption systems in order to reduce future security risks and avoid escalating costs associated with delayed action.