Cylink Cleared for Strong Encryption Export

Cylink Corp said it was the first hardware vendor to win Department of Commerce approval to export strong, 168-bit encryption without key recovery to Europe. The Sunnyvale-based company said the approval was specifically for export to European central banks, which include a network of all 15 European Union countries as well as non-EU members Switzerland, the U.S., Canada and Japan. The U.S. government has been limiting the export of so-called strong encryption under years-old munitions laws. It has taken the position that companies should offer “key recovery” options that could enable government authorities, for example, to tap into encrypted data to decipher its contents. Shares of Cylink, which had been trading at around $8.50 when the news was released just prior to the close of the Nasdaq market, soared in the final minutes of trading, gaining nearly 12% to $9.25 in a rally that continued into after-hours activity.