Coinbase Prepares Post-Quantum Bitcoin Custody for Multiple Signature Schemes

Coinbase is building a post-quantum Bitcoin custody system that can handle any new signature scheme adopted by Bitcoin or another blockchain. The company's chief cryptographer, Yehuda Lindell, said Coinbase wants its custody platform to remain usable regardless of which post-quantum signature schemes blockchains eventually select.

The existing Multi-Party Computation (MPC) systems used by many crypto custodians may not be compatible with some post-quantum signature schemes. Hash-based signatures, for example, lack the arithmetic structure required by traditional cryptographic key splitting. Researchers are studying possible ways to apply MPC-style controls to such signatures, but it's still unclear whether a practical MPC-equivalent system can be created.

Coinbase is exploring an alternative key-protection method using programmable hardware security modules (HSMs). This approach would store private keys encrypted with post-quantum cryptography and assemble them only inside secure HSMs. The full key would temporarily exist within the protected device, requiring physical security to be a top priority.

The company's $250 billion in institutional assets is at stake, including those held by BlackRock, which uses Coinbase Custody for digital assets connected to its investment products. Bitcoin developers have not selected or activated a post-quantum signature standard, leaving custodians without a single technical standard around which to rebuild their systems.