BUNKAYA GANA, ESQ
INTRODUCTION
Financial technology is evolving at a remarkable pace, and trust services are not left out. The way fiduciary relationships are created, managed, and enforced is changing quickly. In Nigeria, this shift is further supported by the Investment and Securities Act 2025 (ISA 2025), which introduces forward-looking provisions that recognise emerging technologies.
Financial technology is evolving at a remarkable pace, and trust services are not left out. The way fiduciary relationships are created, managed, and enforced is changing quickly. In Nigeria, this shift is further supported by the Investment and Securities Act 2025 (ISA 2025), which introduces forward-looking provisions that recognise emerging technologies.
What this means in practical terms is a move away from the traditional, paper-heavy approach to trust administration toward a more digital, data-driven system.
This article explores how digital transformation is reshaping trust services under ISA 2025—looking at both the opportunities it presents and the risks trustees must carefully manage.
OPPORTUNITIES FOR TRUST SERVICES
- Fractional Ownership and Democratisation of Investment
Through tokenisation, high-value assets like real estate or infrastructure can be broken into smaller units. This makes it easier for everyday investors to participate in opportunities that were previously out of reach. - Improved Liquidity through Blockchain Trading
Assets that were once difficult to sell can now be traded on blockchain platforms. This gives beneficiaries and investors more flexibility and clearer exit options. - Automation and Efficiency via Smart Contracts
Smart contracts can handle routine tasks such as distributions and compliance checks automatically. This reduces delays, cuts down on human error, and improves overall efficiency. - Transparency and Auditability
Blockchain’s immutable ledger ensures that all transactions are recorded and verifiable. This strengthens accountability and reduces the likelihood of disputes between trustees and beneficiaries. - Cost Efficiency and Disintermediation
By reducing reliance on intermediaries, blockchain-based systems can lower transaction costs and streamline trust administration.
RISKS
- Regulatory Uncertainty and Classification Issues
Even with ISA 2025 in place, there are still grey areas, especially around how certain digital tokens should be classified. This can expose trustees to compliance challenges. - Cybersecurity and Custodial Risks
Digital assets come with unique vulnerabilities, including hacking and loss of private keys. Trustees need strong security systems to protect these assets. - Smart Contract Limitations
While automation is beneficial, smart contracts are only as reliable as their code. Errors or unforeseen contingencies may lead to unintended outcomes, raising questions about liability and enforceability. - Fiduciary Duty in a Decentralised Environment
The decentralised nature of blockchain may conflict with the centralised accountability expected of trustees. Trustees must ensure that delegation to technological systems does not amount to an abdication of fiduciary responsibility. - Data Privacy and Cross-Border Issues
Blockchain systems often operate across jurisdictions, raising concerns about data protection, regulatory compliance, and conflicts of laws. - Cybersecurity Threats
As trust services become more digitised, they become attractive targets for cyberattacks. Sensitive financial and personal data must be protected against breaches, ransomware, and unauthorised access.
FIDUCIARY IMPLICATIONS UNDER NIGERIAN LAW
- Conduct due diligence on digital asset platforms and technologies: Carefully assess digital platforms, including their security, governance, and regulatory standing before engaging with them.
- Ensure secure custody of private keys and digital wallets: Put strong custody measures in place to protect private keys and wallets from loss or unauthorised access.
- Monitor automated systems to prevent breaches of trust: Regularly monitor smart contracts and other automated tools to ensure they are functioning correctly.
- Provide clear disclosures to beneficiaries regarding risks: Make sure beneficiaries understand the unique risks associated with digital assets, including volatility and cybersecurity concerns.
- Failure to meet these obligations may result in liability: Trustees may be held accountable for losses resulting from inadequate oversight or controls, even where such losses stem from technological failures or third-party platforms.
THE WAY FORWARD: A HYBRID APPROACH
To harness the benefits of digital transformation while mitigating risks, trust service providers should adopt a hybrid approach that integrates technology with human oversight. Key strategies include:
To harness the benefits of digital transformation while mitigating risks, trust service providers should adopt a hybrid approach that integrates technology with human oversight. Key strategies include:
- Developing internal expertise in digital assets and blockchain technology: This involves building the necessary knowledge base within the organisation through continuous training, capacity development, and strategic hiring, so that decisions around digital assets are well-informed and not overly dependent on external parties.
- Implementing robust cybersecurity and risk management frameworks: This requires putting in place strong systems, policies, and controls that protect digital assets from cyber threats while also identifying, assessing, and mitigating operational and financial risks associated with their use.
- Collaborating with regulators and fintech firms: This entails maintaining active and constructive engagement with regulatory bodies and technology partners to ensure compliance with evolving rules, stay ahead of industry developments, and leverage innovative solutions for managing digital assets.
- Maintaining transparent communication with beneficiaries: This means providing clear, timely, and accurate information regarding digital asset investments, including associated risks, performance updates, and any significant developments that may impact their interests.
CONCLUSION
The integration of digital assets into trust services marks a significant turning point in Nigeria’s financial and legal landscape. ISA 2025 provides a strong foundation for this shift by recognising digital assets while maintaining regulatory oversight.
The integration of digital assets into trust services marks a significant turning point in Nigeria’s financial and legal landscape. ISA 2025 provides a strong foundation for this shift by recognising digital assets while maintaining regulatory oversight.
That said, these advancements come with real risks. Trustees must carefully balance innovation with their fiduciary duties, ensuring that efficiency does not undermine responsibility.
In the end, the future of trust services will depend on striking the right balance—blending established legal principles with modern technology to create a system where trust is not only expected but reinforced by design.
This is another modest contribution on the topic by BUNKAYA GANA ESQ, MANAGING DIRECTOR/CE-GREENWICH TRUSTEES LIMITED. He can be reached on 08033335436 or [email protected]
