diff --git a/CHANGELOG.md b/CHANGELOG.md
index 830ce54bd607..2134cc863ff5 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -44,6 +44,10 @@ Ref: https://keepachangelog.com/en/1.0.0/
 
 * (cli) [\#9717](https://github.com/cosmos/cosmos-sdk/pull/9717) Added CLI flag `--output json/text` to `tx` cli commands.
 
+### Bug Fixes
+
+* [\#9766](https://github.com/cosmos/cosmos-sdk/pull/9766) Fix hardcoded ledger signing algorithm on `keys add` command.
+
 ## [v0.42.7](https://github.com/cosmos/cosmos-sdk/releases/tag/v0.42.7) - 2021-07-09
 
 ### Improvements
diff --git a/client/keys/add.go b/client/keys/add.go
index 979983b9bdfe..20c142c777b3 100644
--- a/client/keys/add.go
+++ b/client/keys/add.go
@@ -200,8 +200,8 @@ func RunAddCmd(ctx client.Context, cmd *cobra.Command, args []string, inBuf *buf
 	// If we're using ledger, only thing we need is the path and the bech32 prefix.
 	if useLedger {
 		bech32PrefixAccAddr := sdk.GetConfig().GetBech32AccountAddrPrefix()
-		info, err := kb.SaveLedgerKey(name, hd.Secp256k1, bech32PrefixAccAddr, coinType, account, index)
 
+		info, err := kb.SaveLedgerKey(name, algo, bech32PrefixAccAddr, coinType, account, index)
 		if err != nil {
 			return err
 		}
diff --git a/crypto/keyring/keyring.go b/crypto/keyring/keyring.go
index febad555df9c..b18d6073228e 100644
--- a/crypto/keyring/keyring.go
+++ b/crypto/keyring/keyring.go
@@ -379,14 +379,17 @@ func (ks keystore) SignByAddress(address sdk.Address, msg []byte) ([]byte, types
 
 func (ks keystore) SaveLedgerKey(uid string, algo SignatureAlgo, hrp string, coinType, account, index uint32) (Info, error) {
 	if !ks.options.SupportedAlgosLedger.Contains(algo) {
-		return nil, ErrUnsupportedSigningAlgo
+		return nil, fmt.Errorf(
+			"%w: signature algo %s is not defined in the keyring options",
+			ErrUnsupportedSigningAlgo, algo.Name(),
+		)
 	}
 
 	hdPath := hd.NewFundraiserParams(account, coinType, index)
 
 	priv, _, err := ledger.NewPrivKeySecp256k1(*hdPath, hrp)
 	if err != nil {
-		return nil, err
+		return nil, fmt.Errorf("failed to generate ledger key: %w", err)
 	}
 
 	return ks.writeLedgerKey(uid, priv.PubKey(), *hdPath, algo.Name())
diff --git a/crypto/keyring/keyring_ledger_test.go b/crypto/keyring/keyring_ledger_test.go
index eb7e85f9e89c..b940970af1df 100644
--- a/crypto/keyring/keyring_ledger_test.go
+++ b/crypto/keyring/keyring_ledger_test.go
@@ -95,7 +95,8 @@ func TestAltKeyring_SaveLedgerKey(t *testing.T) {
 
 	// Test unsupported Algo
 	_, err = keyring.SaveLedgerKey("key", notSupportedAlgo{}, "cosmos", 118, 0, 0)
-	require.EqualError(t, err, ErrUnsupportedSigningAlgo.Error())
+	require.Error(t, err)
+	require.Contains(t, err.Error(), ErrUnsupportedSigningAlgo.Error())
 
 	ledger, err := keyring.SaveLedgerKey("some_account", hd.Secp256k1, "cosmos", 118, 3, 1)
 	if err != nil {
@@ -103,6 +104,7 @@ func TestAltKeyring_SaveLedgerKey(t *testing.T) {
 		t.Skip("ledger nano S: support for ledger devices is not available in this executable")
 		return
 	}
+
 	// The mock is available, check that the address is correct
 	require.Equal(t, "some_account", ledger.GetName())
 	pubKey := ledger.GetPubKey()
diff --git a/crypto/ledger/ledger_secp256k1.go b/crypto/ledger/ledger_secp256k1.go
index 659181d30648..ee2f873544c4 100644
--- a/crypto/ledger/ledger_secp256k1.go
+++ b/crypto/ledger/ledger_secp256k1.go
@@ -73,13 +73,13 @@ func NewPrivKeySecp256k1Unsafe(path hd.BIP44Params) (types.LedgerPrivKey, error)
 func NewPrivKeySecp256k1(path hd.BIP44Params, hrp string) (types.LedgerPrivKey, string, error) {
 	device, err := getDevice()
 	if err != nil {
-		return nil, "", err
+		return nil, "", fmt.Errorf("failed to retrieve device: %w", err)
 	}
 	defer warnIfErrors(device.Close)
 
 	pubKey, addr, err := getPubKeyAddrSafe(device, path, hrp)
 	if err != nil {
-		return nil, "", err
+		return nil, "", fmt.Errorf("failed to recover pubkey: %w", err)
 	}
 
 	return PrivKeyLedgerSecp256k1{pubKey, path}, addr, nil
@@ -261,7 +261,7 @@ func getPubKeyUnsafe(device SECP256K1, path hd.BIP44Params) (types.PubKey, error
 func getPubKeyAddrSafe(device SECP256K1, path hd.BIP44Params, hrp string) (types.PubKey, string, error) {
 	publicKey, addr, err := device.GetAddressPubKeySECP256K1(path.DerivationPath(), hrp)
 	if err != nil {
-		return nil, "", fmt.Errorf("address %s rejected", addr)
+		return nil, "", fmt.Errorf("%w: address rejected for path %s", err, path.String())
 	}
 
 	// re-serialize in the 33-byte compressed format