The present application is directed to a method and system for secure electronic communications using physically distributed security hardware and capable of operating by simulating a common or unitary HSM device. This is achieved by implementing the internal operations of the HSM using threshold cryptography on a set of internal nodes. In order to provide the necessary functionality, the keys and the required operations (such as the digital signature) are distributed among these nodes. In particular, the system provides digital signature capabilities through an efficient and modular application of Victor Shoup's schema referred to in the background. The digital signature process involves the steps of: 1) the signing agent receives a document to be signed and the alias of the key with which the document will be signed; 2) the signing agent place the document in the request queue; 3) the active nodes retrieve the request from the queue; 4) each node signs the request with its piece of key; 5) each node puts its partial signature in the response queue; 6) the signing agent receives the partial signatures and verifies them; 7) if at least k>n/2 valid partial signatures are received, the signature is validated and delivered to the client. Otherwise, an error message is generated.