diff --git a/test/functional/wallet_encryption.py b/test/functional/wallet_encryption.py
index 5a5fb3e5be..b30a1478ab 100755
--- a/test/functional/wallet_encryption.py
+++ b/test/functional/wallet_encryption.py
@@ -5,7 +5,9 @@
 """Test Wallet encryption"""
 
 import time
+import subprocess
 
+from test_framework.messages import hash256
 from test_framework.test_framework import BitcoinTestFramework
 from test_framework.util import (
     assert_raises_rpc_error,
@@ -100,6 +102,65 @@ class WalletEncryptionTest(BitcoinTestFramework):
             sig = self.nodes[0].signmessage(address, msg)
             assert self.nodes[0].verifymessage(address, sig, msg)
 
+        self.log.info("Test that wallets without private keys cannot be encrypted")
+        self.nodes[0].createwallet(wallet_name="noprivs", disable_private_keys=True)
+        noprivs_wallet = self.nodes[0].get_wallet_rpc("noprivs")
+        assert_raises_rpc_error(-16, "Error: wallet does not contain private keys, nothing to encrypt.", noprivs_wallet.encryptwallet, "pass")
+
+        if self.is_wallet_tool_compiled():
+            self.log.info("Test that encryption keys in wallets without privkeys are removed")
+
+            def do_wallet_tool(*args):
+                proc = subprocess.Popen(
+                    [self.options.bitcoinwallet, f"-datadir={self.nodes[0].datadir_path}", f"-chain={self.chain}"] + list(args),
+                    stdin=subprocess.PIPE,
+                    stdout=subprocess.PIPE,
+                    stderr=subprocess.PIPE,
+                    text=True
+                )
+                stdout, stderr = proc.communicate()
+                assert_equal(proc.poll(), 0)
+                assert_equal(stderr, "")
+
+            # Since it is no longer possible to encrypt a wallet without privkeys, we need to force one into the wallet
+            # 1. Make a dump of the wallet
+            # 2. Add mkey record to the dump
+            # 3. Create a new wallet from the dump
+
+            # Make the dump
+            noprivs_wallet.unloadwallet()
+            dumpfile_path = self.nodes[0].datadir_path / "noprivs.dump"
+            do_wallet_tool("-wallet=noprivs", f"-dumpfile={dumpfile_path}", "dump")
+
+            # Modify the dump
+            with open(dumpfile_path, "r", encoding="utf-8") as f:
+                dump_content = f.readlines()
+            # Drop the checksum line
+            dump_content = dump_content[:-1]
+            # Insert a valid mkey line. This corresponds to a passphrase of "pass".
+            dump_content.append("046d6b657901000000,300dc926f3b3887aad3d5d5f5a0fc1b1a4a1722f9284bd5c6ff93b64a83902765953939c58fe144013c8b819f42cf698b208e9911e5f0c544fa300000000cc52050000\n")
+            with open(dumpfile_path, "w", encoding="utf-8") as f:
+                contents = "".join(dump_content)
+                f.write(contents)
+                checksum = hash256(contents.encode())
+                f.write(f"checksum,{checksum.hex()}\n")
+
+            # Load the dump into a new wallet
+            do_wallet_tool("-wallet=noprivs_enc", f"-dumpfile={dumpfile_path}", "createfromdump")
+            # Load the wallet and make sure it is no longer encrypted
+            with self.nodes[0].assert_debug_log(["Detected extraneous encryption keys in this wallet without private keys. Removing extraneous encryption keys."]):
+                self.nodes[0].loadwallet("noprivs_enc")
+            noprivs_wallet = self.nodes[0].get_wallet_rpc("noprivs_enc")
+            assert_raises_rpc_error(-15, "Error: running with an unencrypted wallet, but walletpassphrase was called.", noprivs_wallet.walletpassphrase, "pass", 1)
+            noprivs_wallet.unloadwallet()
+
+            # Make a new dump and check that there are no mkeys
+            dumpfile_path = self.nodes[0].datadir_path / "noprivs_enc.dump"
+            do_wallet_tool("-wallet=noprivs_enc", f"-dumpfile={dumpfile_path}", "dump")
+            with open(dumpfile_path, "r", encoding="utf-8") as f:
+                # Check theres nothing with an 'mkey' prefix
+                assert_equal(all([not line.startswith("046d6b6579") for line in f]), True)
+
 
 if __name__ == '__main__':
     WalletEncryptionTest(__file__).main()