Cryptocurrency and estate planning: Safeguarding digital assets

On peer-to-peer comparison, Nigeria stands out in terms of the adoption rates of cryptocurrency trading as the country’s younger population continues to amass significant digital wealth. The initial regulatory prohibition imposed by the Central Bank and the Nigerian Securities and Exchange Commission had now collapsed and been integrated into the capital market system with the promulgation and implementation of the Investments and Securities Act, 2025 (“The Act”).

The Act defines “securities” to include virtual and digital assets, thereby granting the Securities and Exchange Commission (SEC) jurisdiction over the exchanges and wallet providers. This also clarifies the legal position that crypto wealth requires and can be recognised in wills, trusts, and other legal succession/estate planning documents.

While the recognition of such assets legitimises them, it has made the planning of the assets under estate planning more sophisticated and, therefore, requires the involvement of experts for their effective setup and recognition. Assets such as Bitcoin and NFTs are stricto sensu not physical assets like real estate, etc., that could easily be put in a trust. Rather, access to them is controlled by a private key, which, except with proper guidance, can be rendered permanently inaccessible. The traditional executors and trustees may have exceptionally good knowledge of their fiduciary responsibilities and excellent credentials, yet a good understanding of the internet culture and modern estate planning tools could leave families with the burden of bequeathing incomprehensible strings of code to beneficiaries.

Salient provisions of the 2025 Act on the subject.

The Investments and Securities Act 2025 is now the new Nigerian law that regulates the way investments and financial services function within Nigeria. One of the most novel and forward-looking provisions of the Act is that it now includes cryptocurrency and other digital assets as part of the Nigerian capital market.

This means that, like shares, bonds, and mutual funds, Bitcoin, Ethereum, NFTs, and even company-issued tokens are now treated as “securities” within Nigeria’s legal system. The government agency responsible for this is the Securities and Exchange Commission (SEC), which is now vested with the authority to oversee the operation of these assets.

What then are the implications of this new legislation vis-à-vis estate planning and the practice of trustees in Nigeria?

1. Crypto is now legally recognised as a financial asset in Nigeria

Crypto, which was hitherto banned in Nigeria, is now recognised under Section 357 of ISA 2025, with digital and virtual assets now included in the official definition of “securities”. In other words, crypto is now officially included in the list of assets recognised by the government, which can be owned, transferred, and passed on to another person. The good news for trustees is that these assets can now be included in wills, trusts, or any estate planning document.

In line with the fiduciary responsibilities of transparency, trustees, investment managers, or custodians who keep or deal in digital assets belonging to others (like children, beneficiaries, or investors) are now legally liable for such assets and bound to report them to regulators and the beneficiaries of those assets.

To further reinforce the duties of a trustee who deals in these assets, Section 169 finds the trustee liable where it misuses another’s digital asset (like selling it without permission, hiding it, or losing it through negligence); or if the trustee fails to pay over the proceeds when the asset is sold. Similarly, the trustee could be fined up to ₦50 million, or four times the profit improperly obtained by it, together with ₦50,000 for every day the default continues.

It is therefore obvious that while the introduction of digital assets under the new law creates an opportunity for trustees, misuse of such assets attracts very heavy fines. This is a clear message from the regulators that it abhors dishonesty in this new area of the market and expects the trustee to acquire the requisite skills and seek expert opinion before delving into it. It is expected that, as experts offer more insights into the workings of digital assets and proper guidance by the regulators, every trust company can carve a niche for itself in these select areas of the market.

Key strategies for safeguarding digital assets

1. Document all assets

The Act requires that there be full disclosure of assets and proper record-keeping by the trustee. For proper documentation, clients are to endeavour to disclose all their digital assets to the trustee, while the trustee, acting in the capacity of estate planner, should:

• Create a Digital Assets Inventory.

• List the wallet addresses, account logins, and asset type.

• Use clear, unambiguous, and legally enforceable language in trust deeds or wills when referring to digital assets. Avoid the use of complex language and/or definitions that make understanding either difficult or outright impossible.

2. Use secure storage and custodianship

Digital assets should be stored in:

• Multi-signature wallets where multiple keys are needed

• Or held in a licensed custodial exchange approved by the Securities and Exchange Commission. This prevents loss through hacking or mismanagement by an individual.

3. Provide access directions (Without Jeopardising Security)

It is possible for beneficiaries to be unable to access the storage if they have no prior knowledge of the necessary access codes to access the property. The trustee should therefore:

• Use a digital vault

• Appoint a Digital Executor under properly executed legal documents

• Under very strict conditions, disclose a segment of recovery phases to a number of trusted parties or use a secure multi-party computation (MPC) protocol that ensures no single person holds full access, but all can collectively reconstruct the key when needed, in accordance with the estate plan.

4. Include in will or trust deed

The trust documents should specifically mention digital assets, stating clearly:

• Who gets what?

• How and when to use or sell digital assets.

• Detailed KYC update and tax compliance instructions.

Sections 162–165 of ISA, 2025, make the Trustees liable for non-transfer or non-disclosure of known estate assets.

5. Tax and regulatory compliance

Trustees must keep records of transactions and report to the regulators and beneficiaries:

• Capital gains on disposal of crypto or NFTs

• Large movement of suspicious money under Anti-Money Laundering (AML) rules

• Follow SEC and CBN guidelines on digital asset operations.

Sections 73 through 75 of the ISA 2025 authorise the SEC to audit trustees and executors of estates to establish that the assets are properly managed and that they comply with the law.

6. Periodic updates and valuation

Trustees must recognise that digital assets are volatile, and therefore, they must:

• Value these assets periodically

• Use reliable pricing APIs

• Openly record asset increase/decrease in estate reports.

Conclusion

The promulgation of the ISA 2025 demonstrates the SEC’s commitment to deepening the market and expanding the scope of instruments that trustees, managers, and custodians can deal in. The Act is deliberately intended to transmute a hitherto banned and unknown investment instrument like the cryptocurrency into one squarely within the capital market and the purview of the SEC. To the trustees, the law has created an opportunity for practitioners to widen the scope of their operations and make the industry one that plays a significant role in the growth of the market. Therefore, subject to SEC regulation and trustee liability provisions, the law has now enabled the trustee companies to expend the assets that could be put in trusts. These assets, apart from being able to be transferred to third parties, can also be considered as collateral security under very clear guidelines and risk parameters. Although the law dealing with crypto and digital assets has the objective of protecting investors, it also enables settlor/investors to include digital assets in their estate documents just like land, stocks/shares, etc., albeit under very stringent conditions.

As the use of digital assets gains relevance and momentum in Nigeria, the key question is: Are the trustee companies in Nigeria ready to take advantage of this emerging opportunity? Are we positioned knowledge-wise to actively play in this market? A word of caution: I am aware that many investment managers, investors, and trustees are taking positions, crafting strategies, and seeking opinions/clarity towards participating in this area of the business. However, caution is the word, and my parting advice is, “Understand the market before you venture.”

This piece was contributed by Bunkaya Bitrus Gana Esq., Managing Director, Chief Executive, Greenwich Trustees Limited. He can be reached on 08033335436 or [email protected].
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