diff --git a/packages/wallet-service/src/api/txProposalCreate.ts b/packages/wallet-service/src/api/txProposalCreate.ts
index b860c99f..36844db6 100644
--- a/packages/wallet-service/src/api/txProposalCreate.ts
+++ b/packages/wallet-service/src/api/txProposalCreate.ts
@@ -17,6 +17,7 @@ import {
   getWallet,
   getWalletAddresses,
   getWalletAddressDetail,
+  incrementAddressSeqnum,
   markUtxosWithProposalId,
 } from '@src/db';
 import {
@@ -137,6 +138,11 @@ export const create = middy(walletIdProxyHandler(async (walletId, event) => {
       await markUtxosWithProposalId(mysql, txProposalId, inputUtxos);
     }
 
+    if (tx.isNanoContract()) {
+      const nanoHeader = tx.getNanoHeaders()[0];
+      await incrementAddressSeqnum(mysql, walletId, nanoHeader.address.base58);
+    }
+
     await commitTransaction(mysql);
   } catch (e) {
     await rollbackTransaction(mysql);
diff --git a/packages/wallet-service/src/db/index.ts b/packages/wallet-service/src/db/index.ts
index d636d28f..97fb2815 100644
--- a/packages/wallet-service/src/db/index.ts
+++ b/packages/wallet-service/src/db/index.ts
@@ -448,6 +448,22 @@ export const getWalletAddressDetail = async (mysql: ServerlessMysql, walletId: s
   return null;
 };
 
+/**
+ * Increment the seqnum of an address.
+ *
+ * @param mysql - Database connection
+ * @param walletId - Wallet id
+ * @param address - Address to increment seqnum for
+ */
+export const incrementAddressSeqnum = async (mysql: ServerlessMysql, walletId: string, address: string): Promise<void> => {
+  await mysql.query(`
+    UPDATE \`address\`
+       SET \`seqnum\` = \`seqnum\` + 1
+     WHERE \`wallet_id\` = ?
+         AND \`address\` = ?`,
+    [walletId, address]);
+};
+
 /**
  * Initialize a wallet's transaction history.
  *
diff --git a/packages/wallet-service/tests/db.test.ts b/packages/wallet-service/tests/db.test.ts
index 6192d3ce..1434795b 100644
--- a/packages/wallet-service/tests/db.test.ts
+++ b/packages/wallet-service/tests/db.test.ts
@@ -19,6 +19,7 @@ import {
   getUtxosLockedAtHeight,
   getWallet,
   getWalletAddressDetail,
+  incrementAddressSeqnum,
   getWalletAddresses,
   getWalletTokens,
   getWalletBalances,
@@ -926,6 +927,33 @@ test('getWalletAddressDetail', async () => {
   expect(detailNull).toBeNull();
 });
 
+test('incrementAddressSeqnum', async () => {
+  expect.hasAssertions();
+  const walletId = 'walletId';
+
+  await addToAddressTable(mysql, [{
+    address: ADDRESSES[0],
+    index: 0,
+    walletId,
+    transactions: 0,
+    seqnum: 5,
+  }]);
+
+  // seqnum should start at 5
+  const before = await getWalletAddressDetail(mysql, walletId, ADDRESSES[0]);
+  expect(before.seqnum).toBe(5);
+
+  // increment and verify
+  await incrementAddressSeqnum(mysql, walletId, ADDRESSES[0]);
+  const after1 = await getWalletAddressDetail(mysql, walletId, ADDRESSES[0]);
+  expect(after1.seqnum).toBe(6);
+
+  // increment again
+  await incrementAddressSeqnum(mysql, walletId, ADDRESSES[0]);
+  const after2 = await getWalletAddressDetail(mysql, walletId, ADDRESSES[0]);
+  expect(after2.seqnum).toBe(7);
+});
+
 test('getWalletBalances', async () => {
   expect.hasAssertions();
   const walletId = 'walletId';
diff --git a/packages/wallet-service/tests/txProposal.test.ts b/packages/wallet-service/tests/txProposal.test.ts
index 0466d5d0..38578167 100644
--- a/packages/wallet-service/tests/txProposal.test.ts
+++ b/packages/wallet-service/tests/txProposal.test.ts
@@ -4,6 +4,7 @@ import { destroy as txProposalDestroy } from '@src/api/txProposalDestroy';
 import {
   getTxProposal,
   getUtxos,
+  getWalletAddressDetail,
   updateTxProposal,
   updateVersionData,
 } from '@src/db';
@@ -2097,3 +2098,51 @@ test('markUtxosWithProposalId should handle empty utxos array', async () => {
   expect(txProposal).not.toBeNull();
   expect(txProposal.status).toBe(TxProposalStatus.OPEN);
 });
+
+test('POST /txproposals with nano contract tx should increment caller address seqnum', async () => {
+  expect.hasAssertions();
+
+  await addToWalletTable(mysql, [{
+    id: 'my-wallet',
+    xpubkey: 'xpubkey',
+    authXpubkey: 'auth_xpubkey',
+    status: 'ready',
+    maxGap: 5,
+    createdAt: 10000,
+    readyAt: 10001,
+  }]);
+  await addToAddressTable(mysql, [{
+    address: ADDRESSES[0],
+    index: 0,
+    walletId: 'my-wallet',
+    transactions: 0,
+    seqnum: 3,
+  }]);
+
+  // Verify initial seqnum
+  const before = await getWalletAddressDetail(mysql, 'my-wallet', ADDRESSES[0]);
+  expect(before.seqnum).toBe(3);
+
+  // Mock createTxFromHex to return a nano contract transaction
+  const spy = jest.spyOn(hathorLib.helpersUtils, 'createTxFromHex').mockReturnValue({
+    inputs: [],
+    outputs: [],
+    isNanoContract: () => true,
+    getNanoHeaders: () => [{
+      address: { base58: ADDRESSES[0] },
+    }],
+  } as any);
+
+  const event = makeGatewayEventWithAuthorizer('my-wallet', null, JSON.stringify({ txHex: 'mockedhex' }));
+  const result = await txProposalCreate(event, null, null) as APIGatewayProxyResult;
+  const returnBody = JSON.parse(result.body as string);
+
+  expect(result.statusCode).toBe(201);
+  expect(returnBody.success).toBe(true);
+
+  // Verify seqnum was incremented
+  const after = await getWalletAddressDetail(mysql, 'my-wallet', ADDRESSES[0]);
+  expect(after.seqnum).toBe(4);
+
+  spy.mockRestore();
+});