diff --git a/src/qt/bitcoingui.cpp b/src/qt/bitcoingui.cpp
index 863225099afba..2e65e22d13285 100644
--- a/src/qt/bitcoingui.cpp
+++ b/src/qt/bitcoingui.cpp
@@ -1310,6 +1310,12 @@ void BitcoinGUI::setEncryptionStatus(int status)
 {
     switch(status)
     {
+    case WalletModel::NoKeys:
+        labelWalletEncryptionIcon->hide();
+        encryptWalletAction->setChecked(false);
+        changePassphraseAction->setEnabled(false);
+        encryptWalletAction->setEnabled(false);
+        break;
     case WalletModel::Unencrypted:
         labelWalletEncryptionIcon->hide();
         encryptWalletAction->setChecked(false);
diff --git a/src/qt/walletmodel.cpp b/src/qt/walletmodel.cpp
index 967dd588b490b..a6751c145cac6 100644
--- a/src/qt/walletmodel.cpp
+++ b/src/qt/walletmodel.cpp
@@ -305,6 +305,11 @@ WalletModel::EncryptionStatus WalletModel::getEncryptionStatus() const
 {
     if(!m_wallet->isCrypted())
     {
+        // A previous bug allowed for watchonly wallets to be encrypted (encryption keys set, but nothing is actually encrypted).
+        // To avoid misrepresenting the encryption status of such wallets, we only return NoKeys for watchonly wallets that are unencrypted.
+        if (m_wallet->privateKeysDisabled()) {
+            return NoKeys;
+        }
         return Unencrypted;
     }
     else if(m_wallet->isLocked())
diff --git a/src/qt/walletmodel.h b/src/qt/walletmodel.h
index 47a21bcfcf9e7..a189028b0185a 100644
--- a/src/qt/walletmodel.h
+++ b/src/qt/walletmodel.h
@@ -71,6 +71,7 @@ class WalletModel : public QObject
 
     enum EncryptionStatus
     {
+        NoKeys,       // wallet->IsWalletFlagSet(WALLET_FLAG_DISABLE_PRIVATE_KEYS)
         Unencrypted,  // !wallet->IsCrypted()
         Locked,       // wallet->IsCrypted() && wallet->IsLocked()
         Unlocked      // wallet->IsCrypted() && !wallet->IsLocked()