diff --git a/proxy/core/src/main/scala/io/cloudstate/proxy/crdt/CrdtEntity.scala b/proxy/core/src/main/scala/io/cloudstate/proxy/crdt/CrdtEntity.scala
index c2d9174de..956bacce9 100644
--- a/proxy/core/src/main/scala/io/cloudstate/proxy/crdt/CrdtEntity.scala
+++ b/proxy/core/src/main/scala/io/cloudstate/proxy/crdt/CrdtEntity.scala
@@ -46,11 +46,17 @@ object CrdtEntity {
   private final case class Relay(actorRef: ActorRef)
 
   /**
-   * This is sent by Akka streams when the gRPC stream to the user function has closed - which typically shouldn't
-   * happen unless it crashes for some reason.
+   * This is sent by Akka streams when the gRPC stream to the user function has closed - which is expected when the
+   * entity is stopping (such as for passivation) or when deleted.
    */
   final case object EntityStreamClosed
 
+  /**
+   * This is sent by Akka streams when the gRPC stream to the user function has failed - which typically shouldn't
+   * happen unless it crashes for some reason.
+   */
+  final case class EntityStreamFailed(cause: Throwable)
+
   final case object Stop
 
   private final case class AnyKey(_id: String) extends Key[ReplicatedData](_id)
@@ -149,6 +155,7 @@ final class CrdtEntity(client: Crdt, configuration: CrdtEntity.Configuration, en
   private[this] final var outstanding = Map.empty[Long, Initiator]
   private[this] final var streamedCalls = Map.empty[Long, ActorRef]
   private[this] final var closingStreams = Set.empty[Long]
+  private[this] final var closing = false
   private[this] final var stopping = false
 
   implicit val ec = context.dispatcher
@@ -167,7 +174,7 @@ final class CrdtEntity(client: Crdt, configuration: CrdtEntity.Configuration, en
             NotUsed
           }
       )
-      .runWith(Sink.actorRef(self, EntityStreamClosed))
+      .runWith(Sink.actorRef(self, EntityStreamClosed, EntityStreamFailed.apply))
 
     // We initially do a read to get the initial state. Try a majority read first in case this is a new node.
     replicator ! Get(key, ReadMajority(configuration.initialReadTimeout))
@@ -400,9 +407,10 @@ final class CrdtEntity(client: Crdt, configuration: CrdtEntity.Configuration, en
       }
 
     case EntityStreamClosed =>
-      crash("Unexpected entity termination due to stream closure")
+      if (closing) context.stop(self)
+      else crash("Unexpected entity termination due to stream closure")
 
-    case Status.Failure(cause) =>
+    case EntityStreamFailed(cause) =>
       // Means the stream stopped unexpectedly
       crash("Entity crashed", Some(cause))
 
@@ -414,7 +422,8 @@ final class CrdtEntity(client: Crdt, configuration: CrdtEntity.Configuration, en
             actorRef ! Status.Success(Done)
             streamedCalls -= commandId
         }
-        context.stop(self)
+        relay ! Status.Success(())
+        closing = true // wait for stream to be closed before stopping actor
       } else {
         stopping = true
       }
@@ -522,7 +531,8 @@ final class CrdtEntity(client: Crdt, configuration: CrdtEntity.Configuration, en
   private def operationFinished(): Unit =
     if (stopping) {
       if (outstanding.isEmpty) {
-        context.stop(self)
+        relay ! Status.Success(())
+        closing = true // wait for stream to be closed before stopping actor
       }
     } else {
       if (outstandingMutatingOperations > 1) {
@@ -659,6 +669,9 @@ final class CrdtEntity(client: Crdt, configuration: CrdtEntity.Configuration, en
     case EntityStreamClosed =>
     // Ignore
 
+    case EntityStreamFailed(_) =>
+    // Ignore
+
     case ReceiveTimeout =>
       context.parent ! CrdtEntityManager.Passivate
 
diff --git a/tck/src/main/scala/io/cloudstate/tck/CrdtEntityTCK.scala b/tck/src/main/scala/io/cloudstate/tck/CrdtEntityTCK.scala
index f7d6ea32a..307f1a847 100644
--- a/tck/src/main/scala/io/cloudstate/tck/CrdtEntityTCK.scala
+++ b/tck/src/main/scala/io/cloudstate/tck/CrdtEntityTCK.scala
@@ -1983,15 +1983,13 @@ trait CrdtEntityTCK extends TCKSpec {
     }
 
     "verify passivation timeout" in crdtConfiguredTest { id =>
-      pendingUntilFixed { // FIXME: we don't get stream completion, but a failed stream with PeerClosedStreamException
-        configuredClient.call(Request(id))
-        interceptor
-          .expectCrdtEntityConnection()
-          .expectClient(init(ServiceConfigured, id))
-          .expectClient(command(1, id, "Call", Request(id)))
-          .expectService(reply(1, Response()))
-          .expectClosed(2.seconds) // check passivation (with expected timeout of 100 millis)
-      }
+      configuredClient.call(Request(id))
+      interceptor
+        .expectCrdtEntityConnection()
+        .expectClient(init(ServiceConfigured, id))
+        .expectClient(command(1, id, "Call", Request(id)))
+        .expectService(reply(1, Response()))
+        .expectClosed(2.seconds) // check passivation (with expected timeout of 100 millis)
     }
   }
 }