Jefferies Strategist Drops Bitcoin Allocation Over Quantum Computing Fears, South Korea Restricts Foreign Crypto Apps

Jefferies has removed a 10% Bitcoin allocation from its model portfolio, citing concerns over the potential threat of quantum computing to the cryptocurrency's cryptographic security. Christopher Wood, the firm's global head of equity strategy, described the move as a response to the increasing likelihood that quantum computers could compromise Bitcoin's security framework in the near future.

The shift marks a significant reversal for Jefferies, which had previously positioned Bitcoin as a strategic asset for long-term institutional portfolios. Wood now views the cryptocurrency as a less reliable store of value, given the risks posed by quantum computing. The firm has reallocated the 10% weighting equally to gold bullion and gold-mining stocks, reflecting a return to traditional safe-haven assets.

In South Korea, Google has imposed new restrictions on the availability of overseas crypto exchanges in the Google Play Store. Starting January 28, apps must demonstrate compliance with local regulatory standards, including registration with the Financial Intelligence Unit (FIU), to remain accessible. This policy change is expected to significantly reduce competition in the domestic crypto market, favoring local exchanges such as Upbit and Bithumb.

Why Did Jefferies Remove Bitcoin From Its Portfolio?

Jefferies' decision was driven by concerns that quantum computing could break the cryptographic algorithms securing the Bitcoin network. These algorithms, including the Elliptic Curve Digital Signature Algorithm (ECDSA), are vulnerable to quantum attacks, which could allow malicious actors to reverse-engineer private keys and steal funds.

Wood emphasized that the threat is not hypothetical. Research from Chaincode Labs and Coinbase suggests that between 4 million and 10 million Bitcoin could be vulnerable once cryptographically relevant quantum computers become operational. For pension funds and other long-term investors, the risk to Bitcoin's store-of-value proposition is now a central concern.

How Is the Market Responding to These Developments?

The removal of Bitcoin from Jefferies' model portfolio has sparked broader debate among institutional investors about the future of crypto in long-term asset allocation. The move signals growing awareness of quantum risks at the boardroom level, which could lead to more cautious approaches in the sector.

Gold, on the other hand, has benefited from the shift. Wood described it as a historically stress-tested store of value, with strong performance in 2025. Gold mining stocks have also seen renewed interest, reflecting a broader reallocation of assets toward traditional safe havens.

What Are Analysts Watching Next?

Experts are closely following developments in post-quantum cryptography, which could provide a solution to the threat posed by quantum computing. Researchers are exploring new algorithms that can resist quantum attacks. However, transitioning a decentralized network like Bitcoin to these standards presents significant technical and governance challenges.

In South Korea, the focus is on the enforcement of the new Google Play policy and its impact on the crypto market structure. Domestic exchanges are likely to strengthen their market positions, while foreign platforms may need to establish local entities to remain compliant.

Meanwhile, Goldman Sachs is also evaluating opportunities in crypto-adjacent technologies, including tokenization, stablecoins, and prediction markets. CEO David Solomon said the firm is engaging with policymakers and exploring how these innovations could enhance existing operations.

The evolving regulatory landscape, including the Digital Asset Market Clarity Act in the United States, will play a key role in shaping the future of crypto adoption. Solomon emphasized that regulatory clarity is essential for determining how quickly and in what ways these technologies can be integrated into financial services.