Functional encryption (FE) is a versatile paradigm that enables fine-grained access control over encrypted data. Despite its potential, achieving the gold standard of simulation-based security for FE is impossible in full generality. Known impossibility results demonstrate that simulation security cannot be attained if an adversary in the security experiment is permitted either an unbounded number of functional key queries or an unbounded number of challenge ciphertexts. In this work, we circumvent these fundamental barriers by considering two distinct memory-restricted settings: the Bounded Quantum Storage Model and the Bounded Classical Storage Model. In these settings, the plain model impossibility results no longer apply, allowing us to obtain new positive results. Specifically, we construct two adaptively simulation-secure FE schemes in the Bounded Quantum Storage Model: 1) Many functional key scheme: A construction supporting many functional key queries and a single challenge ciphertext, assuming only the existence of one-way functions. 2) Many ciphertext scheme: An information-theoretic secure construction supporting a single non-adaptive functional key, many challenge ciphertexts, and many adaptive functional key queries. Furthermore, we demonstrate that both schemes can be ported to the Bounded Classical Storage Model, assuming the existence of disappearing grey-box obfuscation.

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