diff --git a/src/Makefile.am b/src/Makefile.am
index 28aa3bad7186..e0258a677531 100644
--- a/src/Makefile.am
+++ b/src/Makefile.am
@@ -138,8 +138,6 @@ BITCOIN_CORE_H = \
   base58.h \
   batchedlogger.h \
   bech32.h \
-  bip39.h \
-  bip39_english.h \
   blockencodings.h \
   bloom.h \
   cachemap.h \
@@ -203,7 +201,6 @@ BITCOIN_CORE_H = \
   gsl/assert.h \
   gsl/pointers.h \
   flat-database.h \
-  hdchain.h \
   flatfile.h \
   fs.h \
   httprpc.h \
@@ -365,12 +362,15 @@ BITCOIN_CORE_H = \
   validationinterface.h \
   versionbits.h \
   wallet/bdb.h \
+  wallet/bip39.h \
+  wallet/bip39_english.h \
   wallet/coincontrol.h \
   wallet/coinselection.h \
   wallet/context.h \
   wallet/crypter.h \
   wallet/db.h \
   wallet/fees.h \
+  wallet/hdchain.h \
   wallet/ismine.h \
   wallet/load.h \
   wallet/rpcwallet.h \
@@ -540,12 +540,13 @@ libbitcoin_wallet_a_SOURCES = \
   coinjoin/client.cpp \
   coinjoin/interfaces.cpp \
   coinjoin/util.cpp \
-  hdchain.cpp \
+  wallet/bip39.cpp \
   wallet/coincontrol.cpp \
   wallet/context.cpp \
   wallet/crypter.cpp \
   wallet/db.cpp \
   wallet/fees.cpp \
+  wallet/hdchain.cpp \
   wallet/interfaces.cpp \
   wallet/load.cpp \
   wallet/rpcdump.cpp \
@@ -708,7 +709,6 @@ libbitcoin_common_a_CXXFLAGS = $(AM_CXXFLAGS) $(PIE_FLAGS)
 libbitcoin_common_a_SOURCES = \
   base58.cpp \
   bech32.cpp \
-  bip39.cpp \
   bloom.cpp \
   chainparams.cpp \
   coins.cpp \
diff --git a/src/Makefile.test.include b/src/Makefile.test.include
index 75227a8f8153..a7cd3ceb0b2d 100644
--- a/src/Makefile.test.include
+++ b/src/Makefile.test.include
@@ -46,8 +46,8 @@ FUZZ_SUITE_LD_COMMON = \
  $(LIBTEST_FUZZ) \
  $(LIBTEST_UTIL) \
  $(LIBBITCOIN_CONSENSUS) \
- $(LIBBITCOIN_CRYPTO) \
  $(LIBBITCOIN_WALLET) \
+ $(LIBBITCOIN_CRYPTO) \
  $(LIBBITCOIN_CLI) \
  $(LIBDASHBLS) \
  $(BDB_LIBS) \
@@ -83,7 +83,6 @@ BITCOIN_TESTS =\
   test/base64_tests.cpp \
   test/bech32_tests.cpp \
   test/bip32_tests.cpp \
-  test/bip39_tests.cpp \
   test/block_reward_reallocation_tests.cpp \
   test/blockchain_tests.cpp \
   test/blockencodings_tests.cpp \
@@ -181,6 +180,7 @@ BITCOIN_TESTS =\
 
 if ENABLE_WALLET
 BITCOIN_TESTS += \
+  wallet/test/bip39_tests.cpp \
   wallet/test/coinjoin_tests.cpp \
   wallet/test/psbt_wallet_tests.cpp \
   wallet/test/wallet_tests.cpp \
diff --git a/src/script/signingprovider.h b/src/script/signingprovider.h
index 8ab2793a5b5d..1514a3a3f56e 100644
--- a/src/script/signingprovider.h
+++ b/src/script/signingprovider.h
@@ -6,7 +6,6 @@
 #ifndef BITCOIN_SCRIPT_SIGNINGPROVIDER_H
 #define BITCOIN_SCRIPT_SIGNINGPROVIDER_H
 
-#include <hdchain.h>
 #include <key.h>
 #include <pubkey.h>
 #include <script/script.h>
diff --git a/src/bip39.cpp b/src/wallet/bip39.cpp
similarity index 98%
rename from src/bip39.cpp
rename to src/wallet/bip39.cpp
index 0cae4f43ea87..2cf0eb79c7a9 100644
--- a/src/bip39.cpp
+++ b/src/wallet/bip39.cpp
@@ -24,8 +24,8 @@
 // Source:
 // https://github.com/trezor/trezor-crypto
 
-#include <bip39.h>
-#include <bip39_english.h>
+#include <wallet/bip39.h>
+#include <wallet/bip39_english.h>
 #include <crypto/pkcs5_pbkdf2_hmac_sha512.h>
 #include <crypto/sha256.h>
 #include <random.h>
diff --git a/src/bip39.h b/src/wallet/bip39.h
similarity index 94%
rename from src/bip39.h
rename to src/wallet/bip39.h
index 30f3a6880e2c..b8bf2262ae91 100644
--- a/src/bip39.h
+++ b/src/wallet/bip39.h
@@ -21,8 +21,8 @@
  * OTHER DEALINGS IN THE SOFTWARE.
  */
 
-#ifndef BITCOIN_BIP39_H
-#define BITCOIN_BIP39_H
+#ifndef BITCOIN_WALLET_BIP39_H
+#define BITCOIN_WALLET_BIP39_H
 
 #include <support/allocators/secure.h>
 
@@ -36,4 +36,4 @@ class CMnemonic
     static void ToSeed(SecureString mnemonic, SecureString passphrase, SecureVector& seedRet);
 };
 
-#endif // BITCOIN_BIP39_H
+#endif // BITCOIN_WALLET_BIP39_H
diff --git a/src/bip39_english.h b/src/wallet/bip39_english.h
similarity index 99%
rename from src/bip39_english.h
rename to src/wallet/bip39_english.h
index 961157479ccb..19547f512fa1 100644
--- a/src/bip39_english.h
+++ b/src/wallet/bip39_english.h
@@ -21,8 +21,8 @@
  * OTHER DEALINGS IN THE SOFTWARE.
  */
 
-#ifndef BITCOIN_BIP39_ENGLISH_H
-#define BITCOIN_BIP39_ENGLISH_H
+#ifndef BITCOIN_WALLET_BIP39_ENGLISH_H
+#define BITCOIN_WALLET_BIP39_ENGLISH_H
 
 const char * const wordlist[] = {
 "abandon",
@@ -2076,4 +2076,4 @@ const char * const wordlist[] = {
 0,
 };
 
-#endif // BITCOIN_BIP39_ENGLISH_H
+#endif // BITCOIN_WALLET_BIP39_ENGLISH_H
diff --git a/src/hdchain.cpp b/src/wallet/hdchain.cpp
similarity index 99%
rename from src/hdchain.cpp
rename to src/wallet/hdchain.cpp
index 5a5910accb52..b4fca803a340 100644
--- a/src/hdchain.cpp
+++ b/src/wallet/hdchain.cpp
@@ -1,9 +1,10 @@
 // Copyright (c) 2014-2023 The Dash Core developers
 // Distributed under the MIT software license, see the accompanying
 
-#include <bip39.h>
+#include <wallet/hdchain.h>
+
+#include <wallet/bip39.h>
 #include <chainparams.h>
-#include <hdchain.h>
 #include <key_io.h>
 #include <tinyformat.h>
 #include <util/system.h>
diff --git a/src/hdchain.h b/src/wallet/hdchain.h
similarity index 97%
rename from src/hdchain.h
rename to src/wallet/hdchain.h
index 4c096960c735..bacb834ddc5a 100644
--- a/src/hdchain.h
+++ b/src/wallet/hdchain.h
@@ -1,7 +1,7 @@
 // Copyright (c) 2014-2023 The Dash Core developers
 // Distributed under the MIT software license, see the accompanying
-#ifndef BITCOIN_HDCHAIN_H
-#define BITCOIN_HDCHAIN_H
+#ifndef BITCOIN_WALLET_HDCHAIN_H
+#define BITCOIN_WALLET_HDCHAIN_H
 
 #include <key.h>
 #include <script/keyorigin.h>
@@ -142,4 +142,4 @@ class CHDPubKey
     std::string GetKeyPath() const;
 };
 
-#endif // BITCOIN_HDCHAIN_H
+#endif // BITCOIN_WALLET_HDCHAIN_H
diff --git a/src/wallet/init.cpp b/src/wallet/init.cpp
index 37ebed63b01c..15bd3a1dc50c 100644
--- a/src/wallet/init.cpp
+++ b/src/wallet/init.cpp
@@ -20,14 +20,14 @@
 #ifdef USE_BDB
 #include <wallet/bdb.h>
 #endif
+#include <wallet/bip39.h>
 #include <wallet/coincontrol.h>
+#include <wallet/hdchain.h>
 #include <wallet/wallet.h>
 #include <walletinitinterface.h>
 
-#include <bip39.h>
 #include <coinjoin/client.h>
 #include <coinjoin/options.h>
-#include <hdchain.h>
 
 class WalletInit : public WalletInitInterface
 {
diff --git a/src/wallet/scriptpubkeyman.cpp b/src/wallet/scriptpubkeyman.cpp
index 6d3853fae412..d223b561f4c7 100644
--- a/src/wallet/scriptpubkeyman.cpp
+++ b/src/wallet/scriptpubkeyman.cpp
@@ -218,14 +218,14 @@ bool LegacyScriptPubKeyMan::CheckDecryptionKey(const CKeyingMaterial& master_key
         if (keyFail) {
             return false;
         }
-        if (!keyPass && !accept_no_keys && cryptedHDChain.IsNull()) {
+        if (!keyPass && !accept_no_keys && (hdChain.IsNull() || !hdChain.IsNull() && !hdChain.IsCrypted())) {
             return false;
         }
 
-        if(!cryptedHDChain.IsNull()) {
+        if(!hdChain.IsNull() && !hdChain.IsCrypted()) {
             // try to decrypt seed and make sure it matches
             CHDChain hdChainTmp;
-            if (!DecryptHDChain(master_key, hdChainTmp) || (cryptedHDChain.GetID() != hdChainTmp.GetSeedHash())) {
+            if (!DecryptHDChain(master_key, hdChainTmp) || (hdChain.GetID() != hdChainTmp.GetSeedHash())) {
                 return false;
             }
         }
@@ -237,12 +237,17 @@ bool LegacyScriptPubKeyMan::CheckDecryptionKey(const CKeyingMaterial& master_key
 bool LegacyScriptPubKeyMan::Encrypt(const CKeyingMaterial& master_key, WalletBatch* batch)
 {
     LOCK(cs_KeyStore);
+
     encrypted_batch = batch;
     if (!mapCryptedKeys.empty()) {
         encrypted_batch = nullptr;
         return false;
     }
 
+    // must get current HD chain before EncryptKeys
+    CHDChain hdChainCurrent;
+    GetHDChain(hdChainCurrent);
+
     KeyMap keys_to_encrypt;
     keys_to_encrypt.swap(mapKeys); // Clear mapKeys so AddCryptedKeyInner will succeed.
     for (const KeyMap::value_type& mKey : keys_to_encrypt)
@@ -260,6 +265,26 @@ bool LegacyScriptPubKeyMan::Encrypt(const CKeyingMaterial& master_key, WalletBat
             return false;
         }
     }
+
+    if (!hdChainCurrent.IsNull()) {
+        assert(EncryptHDChain(master_key, hdChain));
+        assert(SetHDChain(hdChain));
+
+        CHDChain hdChainCrypted;
+        assert(GetHDChain(hdChainCrypted));
+
+        DBG(
+            tfm::format(std::cout, "EncryptWallet -- current seed: '%s'\n", HexStr(hdChainCurrent.GetSeed()));
+            tfm::format(std::cout, "EncryptWallet -- crypted seed: '%s'\n", HexStr(hdChainCrypted.GetSeed()));
+        );
+
+        // ids should match, seed hashes should not
+        assert(hdChainCurrent.GetID() == hdChainCrypted.GetID());
+        assert(hdChainCurrent.GetSeedHash() != hdChainCrypted.GetSeedHash());
+
+        assert(SetHDChain(*encrypted_batch, hdChainCrypted, false));
+    }
+
     encrypted_batch = nullptr;
     return true;
 }
@@ -355,6 +380,50 @@ void LegacyScriptPubKeyMan::UpgradeKeyMetadata()
     }
 }
 
+void LegacyScriptPubKeyMan::GenerateNewCryptedHDChain(const SecureString& secureMnemonic, const SecureString& secureMnemonicPassphrase, CKeyingMaterial vMasterKey)
+{
+    assert(!m_storage.IsWalletFlagSet(WALLET_FLAG_DISABLE_PRIVATE_KEYS));
+
+
+    CHDChain hdChainTmp;
+
+    // NOTE: an empty mnemonic means "generate a new one for me"
+    // NOTE: default mnemonic passphrase is an empty string
+    if (!hdChainTmp.SetMnemonic(secureMnemonic, secureMnemonicPassphrase, true)) {
+        throw std::runtime_error(std::string(__func__) + ": SetMnemonic failed");
+    }
+
+    // add default account
+    hdChainTmp.AddAccount();
+    hdChainTmp.Debug(__func__);
+
+    // We need to safe chain for validation further
+    CHDChain hdChainPrev = hdChainTmp;
+    bool res = EncryptHDChain(vMasterKey, hdChainTmp);
+    assert(res);
+    res = SetHDChain(hdChainTmp);
+    assert(res);
+
+    CHDChain hdChainCrypted;
+    res = GetHDChain(hdChainCrypted);
+    assert(res);
+
+    DBG(
+        tfm::format(std::cout, "GenerateNewCryptedHDChain -- current seed: '%s'\n", HexStr(hdChainTmp.GetSeed()));
+        tfm::format(std::cout, "GenerateNewCryptedHDChain -- crypted seed: '%s'\n", HexStr(hdChainCrypted.GetSeed()));
+    );
+
+    // ids should match, seed hashes should not
+    assert(hdChainPrev.GetID() == hdChainCrypted.GetID());
+    assert(hdChainPrev.GetSeedHash() != hdChainCrypted.GetSeedHash());
+
+    hdChainCrypted.Debug(__func__);
+
+    if (!SetHDChainSingle(hdChainCrypted, false)) {
+        throw std::runtime_error(std::string(__func__) + ": SetHDChainSingle failed");
+    }
+}
+
 void LegacyScriptPubKeyMan::GenerateNewHDChain(const SecureString& secureMnemonic, const SecureString& secureMnemonicPassphrase)
 {
     assert(!m_storage.IsWalletFlagSet(WALLET_FLAG_DISABLE_PRIVATE_KEYS));
@@ -387,31 +456,15 @@ bool LegacyScriptPubKeyMan::SetHDChain(WalletBatch &batch, const CHDChain& chain
         return false;
 
     if (!memonly) {
-        if (!batch.WriteHDChain(chain)) {
-            throw std::runtime_error(std::string(__func__) + ": WriteHDChain failed");
-        }
-
-        m_storage.UnsetBlankWalletFlag(batch);
-    }
-
-    return true;
-}
-
-bool LegacyScriptPubKeyMan::SetCryptedHDChain(WalletBatch &batch, const CHDChain& chain, bool memonly)
-{
-    LOCK(cs_KeyStore);
-
-    if (!SetCryptedHDChain(chain))
-        return false;
-
-    if (!memonly) {
-        if (encrypted_batch) {
-            if (!encrypted_batch->WriteCryptedHDChain(chain))
-                throw std::runtime_error(std::string(__func__) + ": WriteCryptedHDChain failed");
+        if (chain.IsCrypted() && encrypted_batch) {
+            if (!encrypted_batch->WriteHDChain(chain))
+                throw std::runtime_error(std::string(__func__) + ": WriteHDChain failed for encrypted batch");
         } else {
-            if (!batch.WriteCryptedHDChain(chain))
-                throw std::runtime_error(std::string(__func__) + ": WriteCryptedHDChain failed");
+            if (!batch.WriteHDChain(chain)) {
+                throw std::runtime_error(std::string(__func__) + ": WriteHDChain failed");
+            }
         }
+
         m_storage.UnsetBlankWalletFlag(batch);
     }
 
@@ -424,12 +477,6 @@ bool LegacyScriptPubKeyMan::SetHDChainSingle(const CHDChain& chain, bool memonly
     return SetHDChain(batch, chain, memonly);
 }
 
-bool LegacyScriptPubKeyMan::SetCryptedHDChainSingle(const CHDChain& chain, bool memonly)
-{
-    WalletBatch batch(m_storage.GetDatabase());
-    return SetCryptedHDChain(batch, chain, memonly);
-}
-
 bool LegacyScriptPubKeyMan::GetDecryptedHDChain(CHDChain& hdChainRet)
 {
     LOCK(cs_KeyStore);
@@ -451,62 +498,52 @@ bool LegacyScriptPubKeyMan::GetDecryptedHDChain(CHDChain& hdChainRet)
     return true;
 }
 
-bool LegacyScriptPubKeyMan::EncryptHDChain(const CKeyingMaterial& vMasterKeyIn, const CHDChain& chain)
+bool LegacyScriptPubKeyMan::EncryptHDChain(const CKeyingMaterial& vMasterKeyIn, CHDChain& chain)
 {
     LOCK(cs_KeyStore);
     // should call EncryptKeys first
     if (!m_storage.HasEncryptionKeys())
         return false;
 
-    if (!cryptedHDChain.IsNull())
-        return true;
-
-    if (cryptedHDChain.IsCrypted())
+    if (chain.IsCrypted())
         return true;
 
-    if (hdChain.IsNull() && !chain.IsNull()) {
-        // Encrypting a new HDChain for an already encrypted non-HD wallet
-        hdChain = chain;
-    }
-
     // make sure seed matches this chain
-    if (hdChain.GetID() != hdChain.GetSeedHash())
+    if (chain.GetID() != chain.GetSeedHash())
         return false;
 
     std::vector<unsigned char> vchCryptedSeed;
-    if (!EncryptSecret(vMasterKeyIn, hdChain.GetSeed(), hdChain.GetID(), vchCryptedSeed))
+    if (!EncryptSecret(vMasterKeyIn, chain.GetSeed(), chain.GetID(), vchCryptedSeed))
         return false;
 
-    hdChain.Debug(__func__);
-    cryptedHDChain = hdChain;
-    cryptedHDChain.SetCrypted(true);
+    CHDChain cryptedChain = chain;
+    cryptedChain.Debug(__func__);
+    cryptedChain.SetCrypted(true);
 
     SecureVector vchSecureCryptedSeed(vchCryptedSeed.begin(), vchCryptedSeed.end());
-    if (!cryptedHDChain.SetSeed(vchSecureCryptedSeed, false))
+    if (!cryptedChain.SetSeed(vchSecureCryptedSeed, false))
         return false;
 
     SecureVector vchMnemonic;
     SecureVector vchMnemonicPassphrase;
 
     // it's ok to have no mnemonic if wallet was initialized via hdseed
-    if (hdChain.GetMnemonic(vchMnemonic, vchMnemonicPassphrase)) {
+    if (chain.GetMnemonic(vchMnemonic, vchMnemonicPassphrase)) {
         std::vector<unsigned char> vchCryptedMnemonic;
         std::vector<unsigned char> vchCryptedMnemonicPassphrase;
 
-        if (!vchMnemonic.empty() && !EncryptSecret(vMasterKeyIn, vchMnemonic, hdChain.GetID(), vchCryptedMnemonic))
+        if (!vchMnemonic.empty() && !EncryptSecret(vMasterKeyIn, vchMnemonic, chain.GetID(), vchCryptedMnemonic))
             return false;
-        if (!vchMnemonicPassphrase.empty() && !EncryptSecret(vMasterKeyIn, vchMnemonicPassphrase, hdChain.GetID(), vchCryptedMnemonicPassphrase))
+        if (!vchMnemonicPassphrase.empty() && !EncryptSecret(vMasterKeyIn, vchMnemonicPassphrase, chain.GetID(), vchCryptedMnemonicPassphrase))
             return false;
 
         SecureVector vchSecureCryptedMnemonic(vchCryptedMnemonic.begin(), vchCryptedMnemonic.end());
         SecureVector vchSecureCryptedMnemonicPassphrase(vchCryptedMnemonicPassphrase.begin(), vchCryptedMnemonicPassphrase.end());
-        if (!cryptedHDChain.SetMnemonic(vchSecureCryptedMnemonic, vchSecureCryptedMnemonicPassphrase, false))
+        if (!cryptedChain.SetMnemonic(vchSecureCryptedMnemonic, vchSecureCryptedMnemonicPassphrase, false))
             return false;
     }
 
-    if (!hdChain.SetNull())
-        return false;
-
+    chain = cryptedChain;
     return true;
 }
 
@@ -516,40 +553,40 @@ bool LegacyScriptPubKeyMan::DecryptHDChain(const CKeyingMaterial& vMasterKeyIn,
     if (!m_storage.HasEncryptionKeys())
         return true;
 
-    if (cryptedHDChain.IsNull())
+    if (hdChain.IsNull())
         return false;
 
-    if (!cryptedHDChain.IsCrypted())
+    if (!hdChain.IsCrypted())
         return false;
 
     SecureVector vchSecureSeed;
-    SecureVector vchSecureCryptedSeed = cryptedHDChain.GetSeed();
+    SecureVector vchSecureCryptedSeed = hdChain.GetSeed();
     std::vector<unsigned char> vchCryptedSeed(vchSecureCryptedSeed.begin(), vchSecureCryptedSeed.end());
-    if (!DecryptSecret(vMasterKeyIn, vchCryptedSeed, cryptedHDChain.GetID(), vchSecureSeed))
+    if (!DecryptSecret(vMasterKeyIn, vchCryptedSeed, hdChain.GetID(), vchSecureSeed))
         return false;
 
-    hdChainRet = cryptedHDChain;
+    hdChainRet = hdChain;
     if (!hdChainRet.SetSeed(vchSecureSeed, false))
         return false;
 
     // hash of decrypted seed must match chain id
-    if (hdChainRet.GetSeedHash() != cryptedHDChain.GetID())
+    if (hdChainRet.GetSeedHash() != hdChain.GetID())
         return false;
 
     SecureVector vchSecureCryptedMnemonic;
     SecureVector vchSecureCryptedMnemonicPassphrase;
 
     // it's ok to have no mnemonic if wallet was initialized via hdseed
-    if (cryptedHDChain.GetMnemonic(vchSecureCryptedMnemonic, vchSecureCryptedMnemonicPassphrase)) {
+    if (hdChain.GetMnemonic(vchSecureCryptedMnemonic, vchSecureCryptedMnemonicPassphrase)) {
         SecureVector vchSecureMnemonic;
         SecureVector vchSecureMnemonicPassphrase;
 
         std::vector<unsigned char> vchCryptedMnemonic(vchSecureCryptedMnemonic.begin(), vchSecureCryptedMnemonic.end());
         std::vector<unsigned char> vchCryptedMnemonicPassphrase(vchSecureCryptedMnemonicPassphrase.begin(), vchSecureCryptedMnemonicPassphrase.end());
 
-        if (!vchCryptedMnemonic.empty() && !DecryptSecret(vMasterKeyIn, vchCryptedMnemonic, cryptedHDChain.GetID(), vchSecureMnemonic))
+        if (!vchCryptedMnemonic.empty() && !DecryptSecret(vMasterKeyIn, vchCryptedMnemonic, hdChain.GetID(), vchSecureMnemonic))
             return false;
-        if (!vchCryptedMnemonicPassphrase.empty() && !DecryptSecret(vMasterKeyIn, vchCryptedMnemonicPassphrase, cryptedHDChain.GetID(), vchSecureMnemonicPassphrase))
+        if (!vchCryptedMnemonicPassphrase.empty() && !DecryptSecret(vMasterKeyIn, vchCryptedMnemonicPassphrase, hdChain.GetID(), vchSecureMnemonicPassphrase))
             return false;
 
         if (!hdChainRet.SetMnemonic(vchSecureMnemonic, vchSecureMnemonicPassphrase, false))
@@ -1077,29 +1114,13 @@ bool LegacyScriptPubKeyMan::AddWatchOnly(const CScript& dest, int64_t nCreateTim
 bool LegacyScriptPubKeyMan::SetHDChain(const CHDChain& chain)
 {
     LOCK(cs_KeyStore);
-    if (m_storage.HasEncryptionKeys())
-        return false;
 
-    if (chain.IsCrypted())
-        return false;
+    if (m_storage.HasEncryptionKeys() != chain.IsCrypted()) return false;
 
     hdChain = chain;
     return true;
 }
 
-bool LegacyScriptPubKeyMan::SetCryptedHDChain(const CHDChain& chain)
-{
-    LOCK(cs_KeyStore);
-    if (!m_storage.HasEncryptionKeys())
-        return false;
-
-    if (!chain.IsCrypted())
-        return false;
-
-    cryptedHDChain = chain;
-    return true;
-}
-
 bool LegacyScriptPubKeyMan::HaveHDKey(const CKeyID &address, CHDChain& hdChainCurrent) const
 {
     LOCK(cs_KeyStore);
@@ -1322,13 +1343,8 @@ void LegacyScriptPubKeyMan::DeriveNewChildKey(WalletBatch &batch, CKeyMetadata&
     if (!hdChainCurrent.SetAccount(nAccountIndex, acc))
         throw std::runtime_error(std::string(__func__) + ": SetAccount failed");
 
-    if (m_storage.HasEncryptionKeys()) {
-        if (!SetCryptedHDChain(batch, hdChainCurrent, false))
-            throw std::runtime_error(std::string(__func__) + ": SetCryptedHDChain failed");
-    }
-    else {
-        if (!SetHDChain(batch, hdChainCurrent, false))
-            throw std::runtime_error(std::string(__func__) + ": SetHDChain failed");
+    if (!SetHDChain(batch, hdChainCurrent, false)) {
+        throw std::runtime_error(std::string(__func__) + ": SetHDChain failed");
     }
 
     if (!AddHDPubKey(batch, childKey.Neuter(), fInternal))
@@ -1760,11 +1776,6 @@ std::set<CKeyID> LegacyScriptPubKeyMan::GetKeys() const
 bool LegacyScriptPubKeyMan::GetHDChain(CHDChain& hdChainRet) const
 {
     LOCK(cs_KeyStore);
-    if (m_storage.HasEncryptionKeys() && !cryptedHDChain.IsNull()) {
-        hdChainRet = cryptedHDChain;
-        return true;
-    }
-
     hdChainRet = hdChain;
     return !hdChain.IsNull();
 }
diff --git a/src/wallet/scriptpubkeyman.h b/src/wallet/scriptpubkeyman.h
index edbbef903f2f..443594982e26 100644
--- a/src/wallet/scriptpubkeyman.h
+++ b/src/wallet/scriptpubkeyman.h
@@ -12,6 +12,7 @@
 #include <util/message.h>
 #include <util/time.h>
 #include <wallet/crypter.h>
+#include <wallet/hdchain.h>
 #include <wallet/ismine.h>
 #include <wallet/walletdb.h>
 #include <wallet/walletutil.h>
@@ -274,9 +275,15 @@ class LegacyScriptPubKeyMan : public ScriptPubKeyMan, public FillableSigningProv
     /** Add a KeyOriginInfo to the wallet */
     bool AddKeyOriginWithDB(WalletBatch& batch, const CPubKey& pubkey, const KeyOriginInfo& info);
 
+    /* Set the HD chain model (chain child index counters) */
+    bool SetHDChain(WalletBatch &batch, const CHDChain& chain, bool memonly);
+
+    bool EncryptHDChain(const CKeyingMaterial& vMasterKeyIn, CHDChain& chain);
+    bool DecryptHDChain(const CKeyingMaterial& vMasterKeyIn, CHDChain& hdChainRet) const;
+    bool SetHDChain(const CHDChain& chain);
+
     /* the HD chain data model (external chain counters) */
     CHDChain hdChain GUARDED_BY(cs_KeyStore);
-    CHDChain cryptedHDChain GUARDED_BY(cs_KeyStore);
 
     /* HD derive new child key (on internal or external chain) */
     void DeriveNewChildKey(WalletBatch& batch, CKeyMetadata& metadata, CKey& secretRet, uint32_t nAccountIndex, bool fInternal /*= false*/) EXCLUSIVE_LOCKS_REQUIRED(cs_KeyStore);
@@ -387,15 +394,11 @@ class LegacyScriptPubKeyMan : public ScriptPubKeyMan, public FillableSigningProv
     //! Generate a new key
     CPubKey GenerateNewKey(WalletBatch& batch, uint32_t nAccountIndex, bool fInternal /*= false*/) EXCLUSIVE_LOCKS_REQUIRED(cs_KeyStore);
 
-    /* Set the HD chain model (chain child index counters) */
-    bool SetHDChain(WalletBatch &batch, const CHDChain& chain, bool memonly);
-    bool SetCryptedHDChain(WalletBatch &batch, const CHDChain& chain, bool memonly);
     /**
      * Set the HD chain model (chain child index counters) using temporary wallet db object
      * which causes db flush every time these methods are used
      */
     bool SetHDChainSingle(const CHDChain& chain, bool memonly);
-    bool SetCryptedHDChainSingle(const CHDChain& chain, bool memonly);
 
     //! Adds a watch-only address to the store, without saving it to disk (used by LoadWallet)
     bool LoadWatchOnly(const CScript &dest);
@@ -452,14 +455,11 @@ class LegacyScriptPubKeyMan : public ScriptPubKeyMan, public FillableSigningProv
      * HD Wallet Functions
      */
 
-    bool EncryptHDChain(const CKeyingMaterial& vMasterKeyIn, const CHDChain& chain = CHDChain());
-    bool DecryptHDChain(const CKeyingMaterial& vMasterKeyIn, CHDChain& hdChainRet) const;
-    bool SetHDChain(const CHDChain& chain);
     bool GetHDChain(CHDChain& hdChainRet) const;
-    bool SetCryptedHDChain(const CHDChain& chain);
     bool GetDecryptedHDChain(CHDChain& hdChainRet);
 
     /* Generates a new HD chain */
+    void GenerateNewCryptedHDChain(const SecureString& secureMnemonic, const SecureString& secureMnemonicPassphrase, CKeyingMaterial vMasterKey);
     void GenerateNewHDChain(const SecureString& secureMnemonic, const SecureString& secureMnemonicPassphrase);
 
     /**
diff --git a/src/test/bip39_tests.cpp b/src/wallet/test/bip39_tests.cpp
similarity index 98%
rename from src/test/bip39_tests.cpp
rename to src/wallet/test/bip39_tests.cpp
index 34796df99b75..2eb63d66e77c 100644
--- a/src/test/bip39_tests.cpp
+++ b/src/wallet/test/bip39_tests.cpp
@@ -4,7 +4,7 @@
 
 #include <test/data/bip39_vectors.json.h>
 
-#include <bip39.h>
+#include <wallet/bip39.h>
 #include <key.h>
 #include <key_io.h>
 #include <test/util/setup_common.h>
diff --git a/src/wallet/wallet.cpp b/src/wallet/wallet.cpp
index ebbcd47e765c..0557f0b43fce 100644
--- a/src/wallet/wallet.cpp
+++ b/src/wallet/wallet.cpp
@@ -644,13 +644,8 @@ bool CWallet::EncryptWallet(const SecureString& strWalletPassphrase)
         }
         encrypted_batch->WriteMasterKey(nMasterKeyMaxID, kMasterKey);
 
-        // must get current HD chain before EncryptKeys
-        CHDChain hdChainCurrent;
-
         for (const auto& spk_man_pair : m_spk_managers) {
             auto spk_man = spk_man_pair.second.get();
-            LegacyScriptPubKeyMan *spk_man_legacy = dynamic_cast<LegacyScriptPubKeyMan*>(spk_man);
-            if (spk_man_legacy != nullptr) spk_man_legacy->GetHDChain(hdChainCurrent);
 
             if (!spk_man->Encrypt(_vMasterKey, encrypted_batch)) {
                 encrypted_batch->TxnAbort();
@@ -660,23 +655,6 @@ bool CWallet::EncryptWallet(const SecureString& strWalletPassphrase)
                 // die and let the user reload the unencrypted wallet.
                 assert(false);
             }
-            if (!hdChainCurrent.IsNull()) {
-                assert(spk_man_legacy->EncryptHDChain(_vMasterKey));
-
-                CHDChain hdChainCrypted;
-                assert(spk_man_legacy->GetHDChain(hdChainCrypted));
-
-                DBG(
-                    tfm::format(std::cout, "EncryptWallet -- current seed: '%s'\n", HexStr(hdChainCurrent.GetSeed()));
-                    tfm::format(std::cout, "EncryptWallet -- crypted seed: '%s'\n", HexStr(hdChainCrypted.GetSeed()));
-                );
-
-                // ids should match, seed hashes should not
-                assert(hdChainCurrent.GetID() == hdChainCrypted.GetID());
-                assert(hdChainCurrent.GetSeedHash() != hdChainCrypted.GetSeedHash());
-
-                assert(spk_man_legacy->SetCryptedHDChain(*encrypted_batch, hdChainCrypted, false));
-            }
         }
 
 
@@ -5538,25 +5516,12 @@ bool CWallet::GenerateNewHDChainEncrypted(const SecureString& secureMnemonic, co
         throw std::runtime_error(strprintf("%s: spk_man is not available", __func__));
     }
 
-    assert(!IsWalletFlagSet(WALLET_FLAG_DISABLE_PRIVATE_KEYS));
-
     if (!HasEncryptionKeys()) {
         return false;
     }
 
     CCrypter crypter;
     CKeyingMaterial vMasterKey;
-    CHDChain hdChainTmp;
-
-    // NOTE: an empty mnemonic means "generate a new one for me"
-    // NOTE: default mnemonic passphrase is an empty string
-    if (!hdChainTmp.SetMnemonic(secureMnemonic, secureMnemonicPassphrase, true)) {
-        throw std::runtime_error(std::string(__func__) + ": SetMnemonic failed");
-    }
-
-    // add default account
-    hdChainTmp.AddAccount();
-    hdChainTmp.Debug(__func__);
 
     LOCK(cs_wallet);
     for (const CWallet::MasterKeyMap::value_type& pMasterKey : mapMasterKeys) {
@@ -5564,43 +5529,24 @@ bool CWallet::GenerateNewHDChainEncrypted(const SecureString& secureMnemonic, co
             return false;
         }
         // get vMasterKey to encrypt new hdChain
-        if (!crypter.Decrypt(pMasterKey.second.vchCryptedKey, vMasterKey)) {
-            continue; // try another master key
+        if (crypter.Decrypt(pMasterKey.second.vchCryptedKey, vMasterKey)) {
+            break;
         }
 
-        bool res = spk_man->EncryptHDChain(vMasterKey, hdChainTmp);
-        assert(res);
-
-        CHDChain hdChainCrypted;
-        res = spk_man->GetHDChain(hdChainCrypted);
-        assert(res);
-
-        DBG(
-            tfm::format(std::cout, "GenerateNewHDChainEncrypted -- current seed: '%s'\n", HexStr(hdChainTmp.GetSeed()));
-            tfm::format(std::cout, "GenerateNewHDChainEncrypted -- crypted seed: '%s'\n", HexStr(hdChainCrypted.GetSeed()));
-        );
-
-        // ids should match, seed hashes should not
-        assert(hdChainTmp.GetID() == hdChainCrypted.GetID());
-        assert(hdChainTmp.GetSeedHash() != hdChainCrypted.GetSeedHash());
+    }
 
-        hdChainCrypted.Debug(__func__);
+    spk_man->GenerateNewCryptedHDChain(secureMnemonic, secureMnemonicPassphrase, vMasterKey);
 
-        if (spk_man->SetCryptedHDChainSingle(hdChainCrypted, false)) {
-            Lock();
-            if (!Unlock(secureWalletPassphrase)) {
-                // this should never happen
-                throw std::runtime_error(std::string(__func__) + ": Unlock failed");
-            }
-            if (!spk_man->NewKeyPool()) {
-                throw std::runtime_error(std::string(__func__) + ": NewKeyPool failed");
-            }
-            Lock();
-            return true;
-        }
+    Lock();
+    if (!Unlock(secureWalletPassphrase)) {
+        // this should never happen
+        throw std::runtime_error(std::string(__func__) + ": Unlock failed");
     }
-
-    return false;
+    if (!spk_man->NewKeyPool()) {
+        throw std::runtime_error(std::string(__func__) + ": NewKeyPool failed");
+    }
+    Lock();
+    return true;
 }
 
 void CWallet::UpdateProgress(const std::string& title, int nProgress)
diff --git a/src/wallet/walletdb.cpp b/src/wallet/walletdb.cpp
index 90ae0c6564d9..67b6447ce717 100644
--- a/src/wallet/walletdb.cpp
+++ b/src/wallet/walletdb.cpp
@@ -9,7 +9,6 @@
 #include <key_io.h>
 #include <fs.h>
 #include <governance/common.h>
-#include <hdchain.h>
 #include <protocol.h>
 #include <serialize.h>
 #include <sync.h>
@@ -22,6 +21,7 @@
 #ifdef USE_SQLITE
 #include <wallet/sqlite.h>
 #endif
+#include <wallet/hdchain.h>
 #include <wallet/wallet.h>
 #include <validation.h>
 
@@ -457,22 +457,15 @@ ReadKeyValue(CWallet* pwallet, CDataStream& ssKey, CDataStream& ssValue,
             ssKey >> strKey;
             ssValue >> strValue;
             pwallet->LoadDestData(DecodeDestination(strAddress), strKey, strValue);
-        } else if (strType == DBKeys::HDCHAIN) {
+        } else if (strType == DBKeys::HDCHAIN || strType == DBKeys::CRYPTED_HDCHAIN) {
             CHDChain chain;
             ssValue >> chain;
+            assert ((strType == DBKeys::CRYPTED_HDCHAIN) == chain.IsCrypted());
             if (!pwallet->GetOrCreateLegacyScriptPubKeyMan()->SetHDChainSingle(chain, true))
             {
                 strErr = "Error reading wallet database: SetHDChain failed";
                 return false;
             }
-        } else if (strType == DBKeys::CRYPTED_HDCHAIN) {
-            CHDChain chain;
-            ssValue >> chain;
-            if (!pwallet->GetOrCreateLegacyScriptPubKeyMan()->SetCryptedHDChainSingle(chain, true))
-            {
-                strErr = "Error reading wallet database: SetHDCryptedChain failed";
-                return false;
-            }
         } else if (strType == DBKeys::HDPUBKEY) {
             wss.nHDPubKeys++;
             CPubKey vchPubKey;
@@ -800,17 +793,15 @@ bool WalletBatch::EraseDestData(const std::string &address, const std::string &k
 
 bool WalletBatch::WriteHDChain(const CHDChain& chain)
 {
-    return WriteIC(DBKeys::HDCHAIN, chain);
-}
-
-bool WalletBatch::WriteCryptedHDChain(const CHDChain& chain)
-{
-    if (!WriteIC(DBKeys::CRYPTED_HDCHAIN, chain))
-        return false;
+    if (chain.IsCrypted()) {
+        if (!WriteIC(DBKeys::CRYPTED_HDCHAIN, chain))
+            return false;
 
-    EraseIC(DBKeys::HDCHAIN);
+        EraseIC(DBKeys::HDCHAIN);
 
-    return true;
+        return true;
+    }
+    return WriteIC(DBKeys::HDCHAIN, chain);
 }
 
 bool WalletBatch::WriteHDPubKey(const CHDPubKey& hdPubKey, const CKeyMetadata& keyMeta)
diff --git a/src/wallet/walletdb.h b/src/wallet/walletdb.h
index 7026b131a687..4847ac737579 100644
--- a/src/wallet/walletdb.h
+++ b/src/wallet/walletdb.h
@@ -219,7 +219,6 @@ class WalletBatch
 
     //! write the hdchain model (external chain child index counter)
     bool WriteHDChain(const CHDChain& chain);
-    bool WriteCryptedHDChain(const CHDChain& chain);
     bool WriteHDPubKey(const CHDPubKey& hdPubKey, const CKeyMetadata& keyMeta);
 
     bool WriteWalletFlags(const uint64_t flags);
diff --git a/test/lint/lint-cppcheck-dash.sh b/test/lint/lint-cppcheck-dash.sh
index 908820cb6840..6d183b5ff61f 100755
--- a/test/lint/lint-cppcheck-dash.sh
+++ b/test/lint/lint-cppcheck-dash.sh
@@ -63,7 +63,6 @@ FILES=$(git ls-files -- "src/batchedlogger.*" \
                         "src/evo/*.h" \
                         "src/governance/*.cpp" \
                         "src/governance/*.h" \
-                        "src/hdchain.*" \
                         "src/keepass.*" \
                         "src/llmq/*.cpp" \
                         "src/llmq/*.h" \
@@ -88,6 +87,7 @@ FILES=$(git ls-files -- "src/batchedlogger.*" \
                         "src/test/dynamic_activation*.cpp" \
                         "src/test/evo*.cpp" \
                         "src/test/governance*.cpp" \
+                        "src/wallet/hdchain.*" \
                         "src/unordered_lru_cache.h")