diff --git a/packages/util-dev/src/mockProviders/mockData.ts b/packages/util-dev/src/mockProviders/mockData.ts
index 3ae22a543af..c67cf47ce95 100644
--- a/packages/util-dev/src/mockProviders/mockData.ts
+++ b/packages/util-dev/src/mockProviders/mockData.ts
@@ -128,6 +128,51 @@ export const utxosWithLowCoins: Cardano.Utxo[] = [
   ]
 ];
 
+export const impureUtxos: Cardano.Utxo[] = [
+  [
+    {
+      address: Cardano.PaymentAddress(
+        'addr_test1qzs0umu0s2ammmpw0hea0w2crtcymdjvvlqngpgqy76gpfnuzcjqw982pcftgx53fu5527z2cj2tkx2h8ux2vxsg475qp3y3vz'
+      ),
+      index: 1,
+      txId: Cardano.TransactionId('c7c0973c6bbf1a04a9f306da7814b4fa564db649bf48b0bd93c273bd03143547')
+    },
+    {
+      address: Cardano.PaymentAddress(
+        'addr_test1qq585l3hyxgj3nas2v3xymd23vvartfhceme6gv98aaeg9muzcjqw982pcftgx53fu5527z2cj2tkx2h8ux2vxsg475q2g7k3g'
+      ),
+      value: {
+        assets: new Map([
+          [AssetId.PXL, 5n],
+          [AssetId.TSLA, 10n]
+        ]),
+        coins: 4_027_026_465n
+      }
+    }
+  ],
+  [
+    {
+      address: Cardano.PaymentAddress(
+        'addr_test1qzs0umu0s2ammmpw0hea0w2crtcymdjvvlqngpgqy76gpfnuzcjqw982pcftgx53fu5527z2cj2tkx2h8ux2vxsg475qp3y3vz'
+      ),
+      index: 2,
+      txId: Cardano.TransactionId('c7c0973c6bbf1a04a9f306da7814b4fa564db649bf48b0bd93c273bd03143547')
+    },
+    {
+      address: Cardano.PaymentAddress(
+        'addr_test1qq585l3hyxgj3nas2v3xymd23vvartfhceme6gv98aaeg9muzcjqw982pcftgx53fu5527z2cj2tkx2h8ux2vxsg475q2g7k3g'
+      ),
+      value: {
+        assets: new Map([
+          [AssetId.PXL, 5n],
+          [AssetId.TSLA, 10n]
+        ]),
+        coins: 4_027_026_465n
+      }
+    }
+  ]
+];
+
 export const utxosWithLowCoinsAndMixedAssets: Cardano.Utxo[] = [
   ...utxosWithLowCoins,
   [
diff --git a/packages/wallet/src/cip30.ts b/packages/wallet/src/cip30.ts
index 035df752cea..016f63bd6e6 100644
--- a/packages/wallet/src/cip30.ts
+++ b/packages/wallet/src/cip30.ts
@@ -230,8 +230,8 @@ const getCollateralCallback = async (
   callback: GetCollateralCallback,
   logger: Logger
 ) => {
+  if (availableUtxos.length === 0) return null;
   const availableUtxosWithoutAssets = getUtxosWithoutAssets(availableUtxos);
-  if (availableUtxosWithoutAssets.length === 0) return null;
   try {
     // Send the amount and filtered available UTxOs to the callback
     // Client can then choose to mark a UTxO set as unspendable
diff --git a/packages/wallet/test/integration/cip30mapping.test.ts b/packages/wallet/test/integration/cip30mapping.test.ts
index 1ba63c67c08..3eae979bebc 100644
--- a/packages/wallet/test/integration/cip30mapping.test.ts
+++ b/packages/wallet/test/integration/cip30mapping.test.ts
@@ -46,7 +46,8 @@ const {
   utxo: mockUtxo,
   utxosWithLowCoins,
   utxosWithLowCoinsAndMixedAssets,
-  sortedUtxosWithLowCoins
+  sortedUtxosWithLowCoins,
+  impureUtxos
 } = mocks;
 
 type TestProviders = Required<Pick<Providers, 'txSubmitProvider' | 'networkInfoProvider'>>;
@@ -269,6 +270,7 @@ describe('cip30', () => {
         });
       });
 
+      // eslint-disable-next-line max-statements
       describe('api.getCollateral', () => {
         // Wallet 2
         let wallet2: BaseWallet;
@@ -294,6 +296,14 @@ describe('cip30', () => {
         let wallet7: BaseWallet;
         let api7: WithSenderContext<WalletApi>;
 
+        // Wallet 8
+        let wallet8: BaseWallet;
+        let api8: WithSenderContext<WalletApi>;
+
+        // Wallet 9
+        let wallet9: BaseWallet;
+        let api9: WithSenderContext<WalletApi>;
+
         beforeAll(async () => {
           // CREATE A WALLET WITH LOW COINS UTxOs
           ({ wallet: wallet2, api: api2 } = await createWalletAndApiWithStores(utxosWithLowCoins));
@@ -330,6 +340,24 @@ describe('cip30', () => {
             true,
             []
           ));
+
+          // WALLET WITH CALLBACK FOR GET COLLATERAL (BRAND NEW WALLET, NO UTXOS)
+          ({ wallet: wallet8, api: api8 } = await createWalletAndApiWithStores(
+            [],
+            providers,
+            mockCollateralCallback,
+            true,
+            []
+          ));
+
+          // WALLET WITH CALLBACK FOR GET COLLATERAL (ONLY IMPURE UTXOs)
+          ({ wallet: wallet9, api: api9 } = await createWalletAndApiWithStores(
+            [],
+            providers,
+            mockCollateralCallback,
+            true,
+            impureUtxos
+          ));
         });
 
         afterAll(() => {
@@ -387,6 +415,27 @@ describe('cip30', () => {
           wallet7.shutdown();
         });
 
+        it('does not execute collateral callback and returns null if brand new wallet (no UTXOS)', async () => {
+          await expect(api8.getCollateral(context)).resolves.toBeNull();
+          expect(mockCollateralCallback).not.toHaveBeenCalled();
+          wallet8.shutdown();
+        });
+
+        it('does executes collateral callback with empty array if wallet has only impure UTXOS', async () => {
+          await expect(api9.getCollateral(context)).resolves.not.toBeNull();
+          expect(mockCollateralCallback).toHaveBeenCalledWith({
+            data: {
+              amount: 5_000_000n,
+              utxos: []
+            },
+            sender: {
+              url: 'https://lace.io'
+            },
+            type: 'get_collateral'
+          });
+          wallet9.shutdown();
+        });
+
         it('does not execute collateral callback if not provided', async () => {
           await expect(api2.getCollateral(context)).rejects.toThrow(ApiError);
           expect(mockCollateralCallback).not.toHaveBeenCalled();