MUMBAI: Sebi chairman Tuhin Kanta Pandey ha called for better technologies to protect digital systems warning that the rise of quantum computing can potentially break cryptography-based encrypted passwords, which are currently used to secure digital systems.
Speaking to the media on the sidelines of the global fintech summit here Wednesday, the chairman of the Securities and Exchange Board said, “research is ongoing into quantum-safe computing, and quantum computing will eventually arrive.”
“This could compromise conventional cryptography, which forms the basis of crypto security. Even passwords generated through cryptography could be broken. This means we will need to change the way we create and protect passwords,” he stated.
He likened the potential impact to the Y2K movement, where systems required adjustments as the year changed from 1999 to 2000.
“Passwords generated through current cryptographic methods can be vulnerable to quantum computing. Wherever cryptography is used for security, preparations will be needed to implement quantum-proof passwords, also referred to as post-quantum cryptography,” Pandey said.
The Sebi chief also highlighted that some fintech companies are already leveraging blockchain technology.
“We have set up a regulatory sandbox where these companies can demonstrate the various applications of blockchain within fintech,” he said.
Earlier addressing the fintech summit, Pandey pointed out that while digital infrastructure has made markets more accessible, it has also equipped fraudsters with new tools to deceive investors.
“Capital markets are a key engine of our country’s growth, and it is our collective responsibility to ensure that this engine runs on a foundation of integrity and transparency,” he emphasised.
Addressing the World investor week 2025 here this Monday, Pandey had said “while digital infrastructure has brought the markets to our fingertips, it has also armed fraudsters with new tools to deceive investors as unsolicited messages on messaging applications, dubious influencers and fake trading apps and websites promise the one thing that our markets can never offer -- guaranteed returns.”
Over the past five years, the country has seen a multi-fold rise in investor participation to 134 million investors. This expansion in investor base has been facilitated by tech driven simplified on-boarding process, increased access and wider awareness.
On the need to effectively navigate the risks of technology, he said every leap in technology brings its own set of risks. Cybersecurity threats have the potential to create systemic disruptions. A single data breach or operational glitch can have cascading effects across interconnected systems.
“As market participants increasingly rely on third-party service providers and cloud-based platforms, new vectors of risk emerge sometimes beyond traditional regulatory perimeters. Under the comprehensive cybersecurity and cyber resilience framework for Sebi regulated entities, we have prescribed measures to ensure that the regulated entities remain equipped with adequate cyber resiliency measures and can withstand, respond to, and recover from cyber threats effectively,” he said.
As we look to the future, we envision a securities market that is not only efficient and resilient but also deeply inclusive, powered by innovation and technology for the benefit of all participants.
