diff --git a/crates/chain/src/canonical_iter.rs b/crates/chain/src/canonical_iter.rs
index 58f266f89..204ead451 100644
--- a/crates/chain/src/canonical_iter.rs
+++ b/crates/chain/src/canonical_iter.rs
@@ -230,6 +230,10 @@ impl<A: Anchor, C: ChainOracle> Iterator for CanonicalIter<'_, A, C> {
             }
 
             if let Some((txid, tx, last_seen)) = self.unprocessed_seen_txs.next() {
+                debug_assert!(
+                    !tx.is_coinbase(),
+                    "Coinbase txs must not have `last_seen` (in mempool) value"
+                );
                 if !self.is_canonicalized(txid) {
                     let observed_in = ObservedIn::Mempool(last_seen);
                     self.mark_canonical(txid, tx, CanonicalReason::from_observed_in(observed_in));
@@ -238,7 +242,7 @@ impl<A: Anchor, C: ChainOracle> Iterator for CanonicalIter<'_, A, C> {
             }
 
             if let Some((txid, tx, height)) = self.unprocessed_leftover_txs.pop_front() {
-                if !self.is_canonicalized(txid) {
+                if !self.is_canonicalized(txid) && !tx.is_coinbase() {
                     let observed_in = ObservedIn::Block(height);
                     self.mark_canonical(txid, tx, CanonicalReason::from_observed_in(observed_in));
                 }
diff --git a/crates/chain/tests/test_tx_graph_conflicts.rs b/crates/chain/tests/test_tx_graph_conflicts.rs
index 862eb9b4b..71944e404 100644
--- a/crates/chain/tests/test_tx_graph_conflicts.rs
+++ b/crates/chain/tests/test_tx_graph_conflicts.rs
@@ -943,6 +943,28 @@ fn test_tx_conflict_handling() {
                 confirmed: Amount::ZERO,
             },
         },
+        Scenario {
+            name: "coinbase tx must not become unconfirmed",
+            tx_templates: &[
+                TxTemplate {
+                    tx_name: "coinbase",
+                    inputs: &[TxInTemplate::Coinbase],
+                    outputs: &[TxOutTemplate::new(21_000, Some(0))],
+                    // Stale block
+                    anchors: &[block_id!(1, "B-prime")],
+                    ..Default::default()
+                }
+            ],
+            exp_chain_txs: HashSet::from([]),
+            exp_chain_txouts: HashSet::from([]),
+            exp_unspents: HashSet::from([]),
+            exp_balance: Balance {
+                immature: Amount::ZERO,
+                trusted_pending: Amount::ZERO,
+                untrusted_pending: Amount::ZERO,
+                confirmed: Amount::ZERO,
+            }
+        }
     ];
 
     for scenario in scenarios {