AN EXAMINATION OF THE CHALLENGES AFFECTING THE APPLICATION OF THE TRADITIONAL PRINCIPLE OF CERTAINTY OF SUBJECT MATTER TO DIGITAL ASSETS AND CRYPTOCURRENCIES HELD IN TRUST IN NIGERIA

ABSTRACT

This research seeks to examine the challenges affecting the application of the traditional principle of certainty of subject matter to digital assets and cryptocurrencies held in trust in present day Nigeria. The principle of certainty of subject matter constitutes one of the three certainties required for the validity of a trust under traditional trust law. However, the introduction of digital assets in form of cryptocurrencies and block chains have led to the emergence of legal and practical difficulties in the application of this principle. This study adopts a doctrinal research methodology through the analysis of statutes, judicial authorities, textbooks, journal articles and internet sources. From the research, it is discovered that characteristics such as decentralization, anonymity, volatility and the borderless nature of cryptocurrencies complicate the identification, traceability and administration of its trust property. The study further observes that Nigeria lacks a comprehensive legal framework governing digital assets in trust relationships and the ones in existence are not flexible enough. The article concludes that traditional trust law principles require flexible judicial interpretation and legislative reforms to effectively accommodate modern digital assets. Recommendations are made for the enactment of digital asset regulations and the modernization of Nigerian trust law.

KEYWORDS

Trust Law, Cryptocurrency, Digital Assets, Blockchain, Certainty of Subject Matter, Nigeria.

1. INTRODUCTION

Trust has been defined by KEETON as “the relationship which arises wherever a person called the trustee is compelled in equity to hold property whether real or personal, and whether by legal or equitable title for the benefit of some persons or for some object permitted by law in such a way that the real benefit of the property accrues, not to the trustee, but to the beneficiaries or other objects of the trust”.[1] Trust can be said to be a device for making disposition of property interest in which the trustee holds legal ownership while the beneficial interest is vested in the beneficiary. The ownership of the trustee creates a special relationship fiduciary in character with respect to trust property. Under trust law, one of the major requirements for the creation of a valid trust is certainty of subject matter. Williams suggested that the requirement of the three certainties for the effectual declaration of a valid trust originated from the words of Langdale in Knight v Knight. The three certainties include

• Certainty of word
• Certainty of object and
• Certainty of subject matter.

Certainty of subject matter requires that the property to be bound by the trust must be certain and clearly identifiable otherwise the said trust will fail. The traditional principle of certainty of subject matter was developed in an era where trust property primarily consisted of tangible and easily identifiable assets such as land, money and shares. However, the emergence of blockchain-based digital assets such as cryptocurrencies has created uncertainty regarding the applicability of traditional trust law principles. Cryptocurrencies including Bitcoin and Ethereum represent an emerging investment class facilitated through blockchain technology which enables fast and secure transactions without intermediaries.

The nature of cryptocurrencies complicates the identification, segregation and tracing of trust property. Furthermore, Nigeria currently lacks comprehensive legislation governing the administration of digital assets held in trust relationships. This legal uncertainty raises concerns regarding ownership, beneficiary protection and judicial enforcement. This article therefore examines the challenges affecting the application of certainty of subject matter to digital assets and cryptocurrencies held in trust in Nigeria.

2. HISTORICAL BACKGROUND

Origin of Trust

The exact origin of trust cannot be ascertained and there are controversies surrounding the subject. What is certain however is that the Court of Chancery entertained trusts cases. One school of thought believed that trust was transplanted into England from Roman legal system. The Court of Chancery no doubt also influenced the law of trusts as administered in that court[2]. Another school of thought however disproved that English law of trust has no connection with Roman law. Notwithstanding this controversy, the law of trusts as we now have it in England was greatly influenced and expanded by the Chancellors in the Chancery Courts which administered equity, in their enforcement of uses. The origin of the modern concept of trust has been credited to the concept of uses during the medieval period, which was a means of conveying land to someone for the use or of one or more persons. The concept then was that a person called the feoffor conveyed land to another person called the foefee for the benefit of one person or more called the beneficiaries and at that time called cestui que use. In this type of arrangement, the common law recognized only the feofee’s legal title in respect of the property conveyed and does not recognize the interest of the cestui que use in any way. As a result, it became common place for the foefee to use the property for his own benefit instead of that of the cestui que use or to use the same in an unconscionable way or to the detriment of the cestui que use or retain the property for himself without the cestui que use being able to get relief or remedy from the common law courts. In its equitable jurisdiction however, the Chancery courts then intervened and act on the conscience of the feofee to make him perform according to the purpose of the conveyance and prevent either the feofee from keeping the property for his own use or to compel the feofee to use the property for the benefit of the cestui qui use in accordance with the agreement that the property is to be used for the benefit of the cestui que use. Through the enforcement of uses by the courts of equity, the equitable interest of the cestui que use in the property conveyed to the feofee became recognised.

The Courts of Chancery [3]do also punish defendants (i.e. feoffee) who disobey its orders by committing them to prison for contempt. The common law courts however do come to the rescue of such erring defendants by obtaining the release of the imprisoned defendants through the writ of habeas corpus. In England, the common law was applied and owing to the harshness or rigidity of this law, equitable principles were development by the Lord Chancellor in order to mitigate the harshness and/or injustice of the common law rules. As a result of the flexible nature of equity and the granting of reliefs to those who the rules of common law worked injustice on, there arose profound conflict between the Lord Ellesmere, Chancellor of the Chancery Court and the Chief Justice of the Common Pleas, Sir Edward Coke, in the Earl of Oxford’s Case (1615) 1 Rep. Ch. 1 during the reign of King James I (1603– 1625). The conflict was resolved in favour of equity such that whenever there is a conflict between the doctrines of equity and the rules of common law that of equity will prevail. Later, there was reorganization of the courts in England by the Judicature Acts of 1873 and 1875 which resulted in the abolition of the Chancery Court. The doctrines of equity and rules of common law then became fused and henceforth administered in the same court.

In connection to the relevance of the concept of uses was at the medieval period and before the Statute of Wills 1540 was enacted, when it was not permitted to transfer land by will. At that time, land was regarded as something personal to the owner and cannot survive him. Any attempt to transfer land by will therefore fails and the tenure of the testator in the land will be extinguished. The concept of use was then employed to circumvent this rule. The concept of trust permits a division in the ownership of trust property between a trustee and a beneficiary so that the trustee is compelled to act entirely in the best interests of the beneficiary in relation to the management of property held in trust. The enforcement of trust by the Chancery is perhaps the most outstanding interference with the common law jurisdiction because of the Chancery’s exercise of its exclusive jurisdiction.

There are different schools of thought with respect to the origin of trust. BLACKSTONE [4]maintains that uses and trust are similar in nature to the Roman Fidei-Commissum, which involved the transfer of inheritance to another with the understanding that the transferee would dispose of the property or its profits at the will of another.

SPENCE also believes that the origin of trust can be traced to Roman Jurisprudence.

FABUNMI noted that like many other legal concepts, no definition of trust appears to have been accepted as both comprehensive and exact.[5]

UNDERHILL defined trust as an equitable obligation binding a person to deal with property over which he has control for the benefit of persons known as beneficiaries. By way of illustration, trusts usually involve situations whereby individuals control or plan the distribution of their property or estate either in their life time or after their deaths[6]. A trust is created by an individual when he executes a written Declaration of Trust directing one person or more persons (sometimes this can be a corporate trust company) called a trustee(s) to hold property or assets in accordance with the terms and conditions contained in the trust instrument for the benefit of one or more persons or a section of the general public, called the‘beneficiaries’or cestui que trust, who are the equitable owners of the property or assets, while the legal interest is vested in the trustee. In Nigeria as in most jurisdictions, the law of trusts is governed by statutes and case law.

Certain requirements must be met before there can be a valid and enforceable trust. These include capacity and the three certainties namely;

(a) Certainty of word

• Certainty of object and
• Certainty of subject matter.

Williams suggested that the requirement of the three certainties originated from Knight v Knight[7]. Certainty of subject matter requires that the property to be bound by the trust must be certain and clearly identifiable, otherwise the purported trust is void.

The emergence of digital assets dates back to 1988 when Nick Szabo proposed the idea of “bit gold”, a decentralized digital form of currency intended to operate without a central authority. A decade later, Satoshi Nakamoto introduced Bitcoin through blockchain technology as the first cryptocurrency operating on a peer-to-peer digital system without intermediaries. The development of blockchain technology later led to the emergence of several digital assets and tokenized systems including Ethereum which introduced smart contracts and decentralized finance applications. As digital assets continued to evolve, their adoption increased rapidly across commercial and financial sectors despite concerns regarding volatility and regulation. The emergence of cryptocurrencies and blockchain-based assets has therefore created new legal questions regarding ownership, tracing and administration of digital assets within trust relationships, particularly in jurisdictions such as Nigeria where comprehensive regulation is still developing.

CONSTITUTION OF TRUSTS AND THE EXCEPTIONS

A trust is said to be completely constituted when the settlor has vested or has done all that is required or necessary to properly vest the trust property in the trustee. Except the property has been transferred, the trust cannot be enforced, as equity will not perfect an imperfect gift or aid a volunteer. As in the case of Milroy v. Lord [8]

i.) Constitution of realty

To constitute a trust in respect of realty, the settlor must comply with all necessary requirements of the law. There must be evidence in writing of such transaction. Section 3 of the Registration of Titles Act[9], applicable in other parts of the country and Section 77 of the Property and Conveyancing Law[10] and the Statute of Frauds Section 7[11], on requirement as to writing, that the land be registered in the trustee’s name or that he has done all that’s required to of him with nothing left to be done by the settlor, otherwise, the trust cannot be enforced for lack of constitution. If the interest to be transferred is an equitable one, the settlor need not vest the legal title in the trustee since he has none. All that is required is that the disposition of the equitable interest must be evidenced in writing as treated previously. Where the settlor has not transferred the property but has covenanted to settle the same for the purpose of the trust, the beneficiary may through the equitable remedy of specific performance in some cases be able to enforce the settlement of the property, although the issue involved in a situation such as this, is one of contract but intertwined with trust. However, where the settlor declares himself as the trustee of the trust property and now wears the double cap of both the settlor and the trustee, there is no need to execute any conveyance to transfer the trust property since he already has the legal interest. The declaration makes him automatically the trustee of the property and thereby holds the same for the interest of beneficiary as also held in Lady Naas v. Westminster Bank Ltd[12].

ii.) Constitution of Personalty

To effect the constitution of pure personalty, mere delivery of the property suffices. In respect of intangible property such as shares etc., the settlor must have executed the necessary transfer form for this purpose and the transfer registered in the company’s register. Where a deed was executed for this purpose but the required transfer form was not used, the transfer will be ineffective same was held in Milroy v. Lord[13]

REQUIREMENTS OF TRUST

Certain requirements must be met before there can be a valid and enforceable trust.

The requirements include;

• CAPACITY: Capacity to create a trust is the same as capacity to hold property. A person who has capacity to hold a land can declare a trust of such land while an infant lacks capacity to hold a legal estate in land and cannot therefore declare a trust in respect of land although he can own and settle a legal or equitable interest in personally or an equitable interest in realty. Section 180 Property and Conveyancing Law[14] provides that “the court may direct a settlement to be made of the property of a lunatic or any part thereof or any interest therein, on such trusts and subject to such powers and provisions as the court may deem expedient”. Section 6 of the Married Women Property Act[15] provides that Married women can now create a trust of their properties.”

3. THEORETICAL FOUNDATION AND CONCEPTUAL CLARIFICATION

The theoretical foundation of this study is rooted in the principles of equity, property law and the doctrine of certainty in trust relationships. Trust law developed under equity for the purpose of protecting beneficial interests and ensuring fairness in the management of property held by trustees on behalf of beneficiaries. The concept of trust permits a division in the ownership of trust property between a trustee and a beneficiary so that the trustee is compelled to act entirely in the best interests of the beneficiary in relation to the management of whatever property is held in trust. The enforcement of trust by the Chancery is perhaps the most outstanding interference with the common law jurisdiction because of the Chancery’s exercise of its exclusive jurisdiction.

KEETON defined trust as “the relationship which arises wherever a person called the trustee is compelled in equity to hold property whether real or personal, and whether by legal or equitable title for the benefit of some persons or for some object permitted by law in such a way that the real benefit of the property accrues, not to the trustee, but to the beneficiaries or other objects of the trust”[16]. FABUNMI noted that like many other definitions of legal terms no definition of trust appears to have been accepted as both comprehensive and exact. UNDERHILL stated that trust is an equitable obligation binding a person to deal with property over which he has control for the benefit of persons called beneficiaries[17]. HONORE held that “in the wide sense, a trust exists when property is to be held or administered by one person on behalf of another or for some purpose other than his own benefit.”[18] PETTIT similarly defined trust as an equitable obligation binding a person called a trustee to deal with property over which he has control for the benefit of beneficiaries or for purposes permitted by law.[19]

One of the major requirements for the creation of a valid trust is certainty of subject matter. Williams suggested that the requirement of the three certainties originated from Knight v Knight. The three certainties include[20];

1. Certainty of intention,
2. Certainty of object and

• Certainty of subject matter.

1. Certainty of Word: Generally, it is believed that words are not required for the creation of trust because of the equitable maxim that provides that “equity looks at the intent rather than the form”. But on further investigation it is hard to determine if the testator through his words showed intention to create a trust. Hence, if on the construction of the words used, it is clear that the testator intends to create a binding duty to carry out his wishes, a Trust is created. In the case of Re Kayford Ltd[21] and the case of Shaw & Ors v. Taylor & Ors[22] as a result of the testators clear intention led to the creation of a Trust. There would be no trust if the donor couples his gift with a request, entreaty or recommendation to the donee and giving the donee the discretion whether to accede to the request or not. See the case of Mussoorie Bank Ltd v. Ray[23] not where a testator left all his properties to his widow “feeling confident that she will act justly to her children in dividing the same when no longer required by her” it was held that there was no trust for the children. In the case of Re Adams v. Kensington Vestry[24] where it was held that “no trust was established. In Akwei v. Akwei[25] there was no express deflation of trust, the court held that on the construction of the will, a trust was created.
2. Certainty of Object : This requires that the beneficiaries must be ascertainable and the interest they should take must be discoverable. Hence, Charitable Trusts are exempted from this requirement. Under this certainty, rules that apply to power are also to be considered. With regards to power, the law is that the power is valid if it can be said with certainty whether any given individual is or is not a member of the class and does not fail, simply because it is impossible to ascertain every member of the class. See Re Coates[26]. In Whishaw v. Stephens[27] case, trustees were given a bare power of appointment among a class which the court held as valid. In Re Poultons Will Trust[28] the power of appointment given to a donee to appoint among the doneee relatives was held valid. In the case of a trust for members of a class, the trust will be void for uncertainty unless the class is described with sufficient precision to enable the trustees compile a list of all its members whenever a distribution is called for. While a trust for unascertainable object is void, a power exercisable in favor of an unascertainable class may be valid. A trust for purposes, not having human beings as beneficiaries and which are not exclusively charitable will fail for uncertainty of object if the purposes are not described with sufficient precision.

III. Certainty of Subject Matter: this requires that the property to be bound by the trust must be certain and clearly identifiable otherwise the purported trust is void. The institution of trust cannot exist without a subject matter otherwise known as the corpus of the trust. Subject matter of a trust is the property upon which the manifest intention of the settlor operates[29].

Property which has ceased to exist cannot be a proper subject matter of trust nor property which has not come into existence. Where the subject matter is uncertain, the trust fails for non-existence of subject matter as seen in cases such as Palmer v Simmons[30] and Sprange v Bernard[31]. The beneficial interest to be taken by beneficiaries must also be certain otherwise the trustees may hold the property on resulting trust for the settlor as established in Boyce v Boyce[32]. However, where the subject matter as a whole is certain and the beneficiaries are certain, the court may enforce the trust by ordering equal distribution on the basis that equality is equity.

Certainty of subject matter in trust law is often divided into two aspects namely certainty as to what property forms the subject matter of the trust and certainty as to the beneficial interests of beneficiaries[33]. The principle exists to ensure clarity, proper administration of trust property and effective judicial enforcement in cases of dispute. Traditionally, trust law developed in relation to conventional forms of property such as land, money and shares which could easily be identified, controlled and segregated. The doctrine therefore operates on the assumption that trust property is capable of precise identification and ownership determination[34].

The study is also founded on traditional property theory which recognizes that property rights must be capable of ownership, transfer, control and legal protection. The possibility of treating digital assets as objects of property rights has increasingly been recognized within common law jurisdictions based on English legal principles. However, cryptocurrencies remain problematic because they do not comfortably fit within traditional classifications of property such as choses in possession or choses in action due to their virtual and decentralized nature.

The emergence of digital assets dates back to 1998 when Nick Szabo proposed the idea of “bit gold”, a decentralized digital form of currency intended to function without central authority. A decade later, Satoshi Nakamoto introduced Bitcoin as the first cryptocurrency operating through blockchain technology. Blockchain is a method of securely recording information on a peer to peer network through a shared and decentralized database in which entries cannot easily be altered. Blockchain entries known as blocks contain encoded information connected to previous blocks, thereby ensuring continuity and security within the system. The realization of the benefits of blockchain technology led to the emergence of several cryptocurrencies and tokenized digital assets including Ethereum which introduced smart contracts and decentralized finance applications. For a digital asset to be considered an asset, it must possess the ability to create value, transfer ownership and be capable of storage or discovery within a digital environment.

Despite concerns regarding volatility and regulation, digital assets have continued to gain acceptance globally across both institutional and retail sectors. However, unlike conventional assets, cryptocurrencies operate within decentralized systems without central regulation or identifiable intermediaries. Their anonymous and borderless nature complicates ownership verification, tracing and administration within trust relationships[35]. This creates challenges regarding segregation of trust property, determination of beneficial interests and enforcement of trustees obligations.

In addition, this study is based on the theory of legal adaptability which suggests that legal principles must evolve in response to technological and societal developments. The rapid growth of cryptocurrencies and blockchain technology has transformed modern commercial transactions globally including in Nigeria. Consequently, the strict application of traditional trust law principles without adaptation may create practical difficulties in determining ownership, tracing digital assets and protecting beneficiaries under trust arrangements involving cryptocurrencies[36]. This therefore examines whether the traditional principle of certainty of subject matter remains suitable within the modern digital age and whether there is need for a more flexible legal and regulatory framework capable of accommodating digital assets held in trust relationships.

4. CONSTITUENT ELEMENTS

One of the most important requirements for the creation of a valid express trust is the doctrine of the three certainties established in Knight v Knight. The requirements include as stated; Certainty of Subject Matter, Certainty of Object and Certainty of Intention. The validity of a trust depends largely on the satisfaction of this legal requirements developed under the principles of equity. These requirements exist to ensure clarity in trust relationships, proper administration of trust property and effective judicial enforcement in cases of dispute. The application of these principles becomes more significant in modern transactions involving digital assets and cryptocurrencies held in trust relationships.

CERTAINTY OF SUBJECT MATTER

The subject matter of a trust must be sufficiently certain. Without property upon which the trust can bite, there can be no valid trust. Where the property to be held in trust is not certain, it would be difficult to administer the trust properly. Property is defined broadly and not limited to tangible goods. In Swift v. Dairy wise Farms Ltd[37] of which the definition of Property as provided in Section 436 of the Insolvency Act [38] was adopted to include “ money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested it contingent, arising out of or incidental to property”

Identifying the subject matter of the trust and whether it meets the certainty requirement require careful construction of language. In Kindersley V-C and Re Golay’s Will Trusts[39] it is shown that the subject matter of the trust must be objectively clear. The property subject to the trust must be identifiable. In Re London Wine Co (Shippers) Ltd[40] where it was held that there could be no trust since the subject matter of the trust was uncertain. See Hunter v. Moss where a trust of over fifty shares out of a larger holding of identical shares was upheld despite the absence of segregation[41]. The court distinguished shares from tangible property because shares are intangible and identical in nature.. But as long as the subject matter of a trust is capable of being located, mere evidential uncertainty as to its location will not cause the trust to fail. This follows from the principle “ certum est quod certum reddi potest “ “that is certain which can be made certain”. On the other hand, a trust may fail if there are evidential difficulties in identifying the subject matter. Even if the trust property and the trust beneficiaries are ascertained or ascertainable, the trust will fail if there is no means of ascertaining which part of the subject matter is to go to the beneficiaries. An express trust of a homogeneous mass May fail for lack of certainty of subject even is there is no doubt that a trust was expressly intended. In Palmer v Simmonds[42] the trust failed because the phrase “bulk of my residuary estate” was uncertain. This principle creates challenges in relation to cryptocurrencies held in pooled wallets where specific digital assets may not be separately identifiable. Hence, A declaration of trust must make clear the property that is to be bound by the trust otherwise the purported trust will fail. The principle of certainty of subject matter is usually divided into two aspects. The first relates to certainty as to the property forming the trust while the second concerns certainty regarding the beneficial interests of beneficiaries. Both aspects are essential because uncertainty regarding either the trust property or the beneficial interests may render the trust unenforceable. Property which has ceased to exist cannot constitute valid trust property. Likewise, property which has not yet come into existence may create difficulties although the trust may become effective once the property comes into existence. In case of Sprange v Barnard[43] the testatrix gave property to her husband “for his use” and directed that whatever remained at his death should go to others. The court held that the husband took absolutely because the subject matter of the trust was uncertain. The issue of certainty of subject matter becomes more complicated in relation to digital assets and cryptocurrencies. Traditionally, trust law developed in relation to tangible and easily identifiable assets such as land, money and shares. However, cryptocurrencies operate within decentralized blockchain systems and possess characteristics which differ significantly from conventional property[44].

One major challenge is the issue of identification and segregation of digital assets.    Beyond regulatory considerations, the operational integrity of digital asset custody raises significant legal and technological concerns. Cryptocurrencies may be stored in pooled wallets containing assets belonging to multiple users without physical separation[45]. This creates difficulties regarding the identification of the exact assets subject to a trust relationship. These provisions are highly relevant to cryptocurrencies and blockchain-based assets because digital assets are intangible and often exist within pooled systems similar to shares or bulk assets. The courts may therefore face difficulties in determining whether cryptocurrencies should be treated like shares in Hunter v Moss[46] or like tangible bulk property in Re London Wine[47] and Re Goldcorp Exchange[48]. Another challenge relates to tracing and ownership verification. Blockchain systems operate through anonymous wallet addresses without centralized control. Also, cryptocurrencies are highly volatile and can fluctuate rapidly in value. This volatility may complicate trust administration and valuation of beneficiaries’ interests. Although the Securities and Exchange Commission has introduced certain regulations relating to digital assets, legal uncertainty still exists regarding ownership rights, tracing mechanisms and judicial enforcement of cryptocurrency trusts.[49] Therefore, while the doctrine of certainty of subject matter remains fundamental to trust law, its traditional application faces significant challenges in the digital age.[50]

5. IMPACT/ CHALLENGES OF APPLYING CERTAINTY OF SUBJECT MATTER TO DIGITAL ASSETS

 The concept of Cryptocurrency and digital asset does not fit properly into the traditional concept of trust because traditional law was designed to for physical and tangible assets whereas Cryptocurrencies are Digital and Borderless assets. There is an increasing need for the legal adaptation and regulatory development capable of accommodating digital assets within modern trust relationships as a result of industrialization and technological development. Digital assets custody in Nigeria faces several significant challenges, even with the legal clarity brought by the ISA 2025[51] and ongoing regulatory reforms.

The growth in digital technology has resulted in changes in modern commercial transactions amongst individuals worldwide. One of the major consequences has been the challenges posed by cryptocurrency and blockchain-based digital assets to traditional trust law principles. Certainty of subject matter requires that trust property must be clearly identifiable and ascertainable before a valid trust can exist. However, cryptocurrencies possess characteristics such as volatility, anonymity and digital transferability which complicate the identification and tracing of trust property.

Furthermore, cryptocurrencies can be transferred instantly across jurisdictions and may be stored in pooled digital wallets, thereby creating problems regarding segregation and ownership[52]. The loss, theft, or compromise of private keys, whether through cyberattack, internal malfeasance, or inadequate key management protocols, can result in the permanent and untraceable loss of client assets. The absence of comprehensive legislation regulating digital assets in Nigeria also creates uncertainty regarding the recognition, administration and enforcement of trusts involving cryptocurrencies. Traditional tracing rules in equity and the doctrines of Trust depend on identifying trust property but cryptocurrencies can be transferred instantly and anonymously through multiple wallets. In trust arrangements involving crypto wallets or digital exchanges, the intention to create a trust relationship must be clearly expressed especially because digital assets may be transferred electronically without formal documentation and the absence of clear intention may create disputes regarding ownership, custody and administration of digital assets. Also, where the beneficiaries cannot be identified with sufficient precision as in the case of digital assets and cryptos the trust may fail for uncertainty as the only way most times to identify beneficiaries may be through anonymous wallet addresses or digital identities which may not in all circumstances be real. Another major challenge is the security risks and cybersecurity threats associated with the custody of these digital assets. Digital assets, by their very nature, are attractive targets for hackers[53]. Nigerian custodians face the same cybersecurity threats as their global counterparts. In July 2025, Indian cryptocurrency exchange CoinDCX suffered a security breach, resulting in a loss of approximately USD 44 million. Prior to the CoinDCX incident, reports 5 indicated that total cryptocurrency thefts had already surpassed USD 2.17 billion. This succession of breaches underscores the persistent security vulnerabilities within the cryptocurrency sector and highlights the escalating cyber threats facing the digital currency ecosystem.[54]

All that is being said is that, although the doctrine of certainty of subject matter remains one of the fundamental requirements for the creation of a valid trust, the rapid development of digital assets has created several legal and practical challenges regarding its application because cryptocurrencies possess unique characteristics such as decentralization, anonymity, volatility and borderless transferability which complicate the traditional understanding of trust property and the application of certainty of subject matter. Traditional trust law operates on the assumption that trust property must be capable of clear identification, ownership and segregation and unlike conventional financial assets which are usually managed through centralized institutions such as banks and financial intermediaries, cryptocurrencies operate through decentralized peer-to-peer systems without central authority or control. Secondly, though regulatory bodies such as the Securities and Exchange Commission have introduced certain rules relating to digital assets, there is still no comprehensive legislation specifically governing cryptocurrencies held in trust relationships. Hence, trustees and beneficiaries may encounter uncertainty regarding their legal rights, obligations and remedies. The adoption of modern digital assets also affect the issue of tracing under Trust Law. The doctrine of tracing traditionally depends on the ability to identify the trust property of which becomes more difficult with respect to digital assets due to the fact that the identities of the parties involved are usually concealed.[55] Another challenge that may be faced is the issue of loss of private cryptographic keys. Since control of cryptocurrencies depends largely on possession of private keys, the loss or theft of such keys may permanently prevent access to trust property. Unlike conventional banking systems where transactions may sometimes be reversed or accounts frozen, blockchain transactions are generally irreversible. This increases the risk of permanent loss of trust assets and may leave beneficiaries without effective remedies[56].

See also the issue of Volatility. Digital assets are inherently volatile, and this volatility poses an ongoing challenge for custodians responsible for safeguarding institutional holdings. Cryptocurrencies such as Bitcoin and Ethereum are highly unstable in value and may experience rapid price fluctuations within very short periods of time of which creates issues for the trustees in the administration of the said trust property[57]. It also complicated the issue of valuation of trust property and determination of beneficiary interest. Trustees may also face uncertainty regarding the extent of their fiduciary duties during the management of the trust. which can fluctuate dramatically short periods. * This instability complicates the accurate valuation of assets under custody, impairs long-term planning, and heightens risk exposure.

Lastly we consider the issue of Fraud. Cryptocurrency transactions are usually conducted through wallet addresses.The decentralized and pseudonymous nature of many digital asset systems makes it difficult for regulators to trace illicit flows or hold perpetrators accountable, particularly where such actors operate across borders or leverage regulatory arbitrage. The anonymous nature of cryptocurrency transactions creates several legal and practical difficulties. Traditional trust relationships operate on the assumption that trustees, beneficiaries and trust property are identifiable. However, where parties operate through anonymous digital identities it may increases the risk of fraud, cybercrime and money laundering on the asset held in trust.[58] Fraudulent trustees may conceal or transfer cryptocurrencies through multiple anonymous wallets thereby making recovery difficult. The decentralized structure of blockchain technology also limits governmental and judicial control over digital assets.

There is therefore an increasing need for Nigeria to develop clearer legal and regulatory frameworks capable of accommodating cryptocurrencies and digital assets within trust relationships[59]. Despite the evolving regulatory oversight, enforcement remains a formidable challenge. Such reforms would provide greater legal certainty, enhance investor protection and facilitate effective administration of digital assets held in trust. Although there has been established ISA 2025 of which digital assets are now formally recognized as securities and it clarifies their legal status and strengthens the enforceability of ownership rights[60]. However, the cross-border nature of digital assets continues to pose jurisdictional challenges, particularly for foreign custodians and investors.

7. CONCLUSION

In conclusion, this study establishes that certainty of subject matter remains one of the fundamental requirements for the creation of a valid trust because trust property and beneficiaries interests must be clearly identifiable and ascertainable. It has also been seduced from the above research that traditional trust law principles were developed primarily in relation to conventional forms of property such as land, money and shares which could easily be identified, segregated and controlled. However, the emergence of blockchain technology and cryptocurrencies have introduced new forms of intangible and decentralized assets which do not fit neatly within traditional legal classifications of property. The various challenges posed by the establishment of digital assets and cryptocurrency like its volatility, anonymity, ownership and poor means of identification have also been discussed and attributed. It has also been established that although Nigeria has began to recognize digital assets through certain regulatory measures, there is still no comprehensive legal framework specifically regulating cryptocurrencies held in trust relationship. Hence, while the doctrine of certainty of subject matter remains an essential principle of trust law, its traditional application may no longer be entirely sufficient in the modern digital age. Consequently, there is need for legal adaptation and regulatory reform capable of accommodating digital assets and cryptocurrencies within contemporary trust relationships. It is submitted that new legislation on digital asset trusts should be enacted and courts should adopt a flexible interpretation of the rules of certainty, and that trustees dealing with cryptocurrencies should be subject to fiduciary compliance obligations. Where laws are put in place, it would serve as a guide to help curb the issue of fraud and ensure that trust property are identifiable. The provisions of the Traditional Trust law would now be said to be inapplicable in modern days as things are changing and the approach to things in time past cannot suffice in present day. There need to be a change of law or an amendment to the legislation or rules governing trust with respect to digital assets. 

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Nigeria Tax Act 2025 s 202. 

Investments and Securities Act 2025 ss 26-27. 

Investments and Securities Act 2025 s 357.

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[1] See Keeton & Sheridan op. cit page 58.

See Keeton & Sheridan op. cit page 59.

See Lewin, Law of Trusts 1964 pp 41-50; Snell’s Principles of Equity 27^th Ed. 1973 111-115; Keeton and Sheridan’s Law of Trust 12^th Ed. 112-121

[2] See Jegede, Law of Trust, Bankruptcy and Administration of Estate, 1999 pages 1-11

[3] Spence: Court of Chancery (1846) Vol. 1 page 435-436

[4] Blackstone’s Comm (Lewis Ed Bk) 327-329

[5] Fabunmi, J.O., Equity and Trust in Nigeria, 2^nd ed., (OAU Press, Ile-Ife,2006) 196

[6] Underhill’s Law of Trusts, 12^th ed. (1970) 3.

[7] [1840] 3 Beav. 148

[8] [1862] 4 De GF & J 264

[9] Registration of Titles Act, Cap. 181, Laws of Nigeria

[10] Property and Conveyancing Law pg 97

[11] Statute of Fraud 1677

[12] [1940] A.C. 366

[13] [1862] 4; De G.F & J, 264

[14] Property and Conveyancing Law Cap 99 Laws of Oyo State 1978

[15] Married Women Property Law, Cap. 68 Laws of Ogun State. Similar Provision is contained in the Laws of Oyo, Ondo, Osun, Ekiti, Edo and Delta State

[16] See Keeton and Sheridan op. cit page 58-59

[17] Underhill’s Law of Trusts, 12^th ed. (1970) 3.

[18] Honore, A.M., The South African Law of Trusts, 5^th ed., (Juta Legal and Academic Publishers,2002) 212

[19] Petit, op. cit., at 25

[20] C.L. Williams, The Three Certainties [1940] 4 M.L.R. 20; Watkin ‘Doubts and Certainties’ [1979] 4 Anglo American Law Review 123.

[21] [1975] 1 All E.R. 604

[22] [1918] 3 N.L.R. 80

[23] [1882] 7 App. Cas 321

[24] [1884] 27 Ch. D. 394

[25] [1943] 9 WACA 111

[26] [1955] 1 Ch. 495, 1 All E.R. 26

[27] [1971] A.C. 508

[28] [1955] 1 Ch. 495, 1 All E.R. 26

[29] Keeton and Sheridan, Modern Law of Charities, Chap. 11

[30] [1854] 2 Drew 221

[31] [1789] 2 Bro. G.C. 585

[32] [1849] 16 Sim 476

[33] See Todd, P., Cases and Materials on Equity and Trust, 2^nd ed., (Blackstone Press Ltd, London, 1996) 93

[34] Petit Equity and The Law of Trusts (12^th ed, Oxford University Press, Oxford, 2012) at 53

[35] UniWriter AI, ‘How has Technology Affected Certainty of Subject Matter in Law?’ (UniWriter AI) accessed 14 May 2026

[36] Oladiran Falore and Salama Jidda, ‘Digital Assets Custody: Institutional Challenges and Opportunities in the Nigerian Context’ (Modaq) accessed 12 May 2026

[37] [2000] 1 WLR 1177. See Clarke [2000] All ER Rev 247

[38] [1986] Insolvency Act

[39] [1965] 2 All E.R. 660

[40] [1986] PCC 121

[41] P.Davies and G.Virgo, Equity and Trusts Text, Cases and Materials, 3^rd ed.,Oxford University Press pg 226

[42] [1854] 2 Drew 221

[43] [1789] 2 Bro CC 585

[44] Fidelity Digital Assets (2021).

[45] Law Commission, Annual Report 2019-2020

[46] [1994] 1 WLR 452(EWCA), hereafter referred to as Hunter v. Moss (CA). Leave to appeal to the House of Lords was denied, see Hunter v. Moss [1994] 1 WLR 614

[47] [1986] PCC 121

[48][48] [1995] 1 AC 74 (PC). This case, as well as Re London Wine, pre-dated section 20A of the Sale of Goods Act 1979

[49] Section 357, Investment and Securities Act 2025

[50] Rule 66.0, Amended Digital Assets Rules

[51] Section 26 & 27, ISA 2025.

[52] Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers 2023

[53] Deloitte (2020). Navigating Operational Risks in the Digital Asset Space. Deloitte Insights. (https://www.deloitte.com/)

[54] Oleh Diak, ‘Operating activities of cryptocurrency exchanges and specifics of their accounting

[55] Amended Digital Asset Rules

[56] Investment and Securities Act 2025

[57] CoinMarketCap (2023). Volatility in the Crytocurrency Market: A Historical Perspective. CoinMarketCap. (https:coinmarketcap.com/) accessed on 12 May 2026

[58] S.Green, ‘Digital Assets and the Law: Navigating Uncertainty in Property Rights’ (2019) 82(3) Modern Law Review

[59] PwC, ‘Understanding Cryptocurrency and Digital Assets’ (PwC, accessed 14 May 2026)

[60] Section 127, ISA 2025