diff --git a/operator/pallets/datahaven-native-transfer/src/lib.rs b/operator/pallets/datahaven-native-transfer/src/lib.rs
index 11069a43..01f2f998 100644
--- a/operator/pallets/datahaven-native-transfer/src/lib.rs
+++ b/operator/pallets/datahaven-native-transfer/src/lib.rs
@@ -26,7 +26,7 @@ use frame_support::{
 use snowbridge_core::TokenId;
 use snowbridge_outbound_queue_primitives::v2::{Command, Message as OutboundMessage, SendMessage};
 use sp_core::{H160, H256};
-use sp_runtime::BoundedVec;
+use sp_runtime::{traits::Saturating, BoundedVec};
 use sp_std::vec;
 
 pub use pallet::*;
@@ -135,6 +135,8 @@ pub mod pallet {
         ZeroFee,
         /// Native token has not been registered on Ethereum yet
         TokenNotRegistered,
+        /// Insufficient balance in Ethereum sovereign account
+        InsufficientSovereignBalance,
     }
 
     #[pallet::call]
@@ -275,13 +277,19 @@ pub mod pallet {
         ///
         /// Transfers tokens from the Ethereum sovereign account back to user
         pub fn unlock_tokens(who: &T::AccountId, amount: BalanceOf<T>) -> DispatchResult {
+            let sovereign = T::EthereumSovereignAccount::get();
+            let balance = T::Currency::balance(&sovereign);
+            let minimum_balance = T::Currency::minimum_balance();
+            let available_balance = balance.saturating_sub(minimum_balance);
+
+            // Allow unlocking only from funds that exceed the existential buffer.
+            ensure!(
+                available_balance >= amount,
+                Error::<T>::InsufficientSovereignBalance
+            );
+
             // Transfer from the Ethereum sovereign account
-            T::Currency::transfer(
-                &T::EthereumSovereignAccount::get(),
-                who,
-                amount,
-                Preservation::Preserve,
-            )?;
+            T::Currency::transfer(&sovereign, who, amount, Preservation::Preserve)?;
 
             Self::deposit_event(Event::TokensUnlocked {
                 account: who.clone(),
diff --git a/operator/pallets/datahaven-native-transfer/src/tests.rs b/operator/pallets/datahaven-native-transfer/src/tests.rs
index 6ccad384..da460c3b 100644
--- a/operator/pallets/datahaven-native-transfer/src/tests.rs
+++ b/operator/pallets/datahaven-native-transfer/src/tests.rs
@@ -243,7 +243,10 @@ fn unlock_tokens_works() {
         ));
 
         assert_eq!(Balances::balance(&BOB), INITIAL_BALANCE + unlock_amount);
-        assert_eq!(Balances::balance(&ETHEREUM_SOVEREIGN), 1); // Existential deposit remains
+        assert_eq!(
+            Balances::balance(&ETHEREUM_SOVEREIGN),
+            Balances::minimum_balance()
+        ); // Existential deposit remains
 
         // Check event
         assert_eq!(
@@ -262,7 +265,21 @@ fn unlock_insufficient_sovereign_balance_fails() {
         // Try to unlock without any locked tokens
         assert_noop!(
             DataHavenNativeTransfer::<Test>::unlock_tokens(&BOB, 1000),
-            DispatchError::Token(sp_runtime::TokenError::FundsUnavailable)
+            Error::<Test>::InsufficientSovereignBalance
+        );
+    });
+}
+
+#[test]
+fn unlock_fails_if_existential_deposit_would_be_consumed() {
+    new_test_ext().execute_with(|| {
+        let amount = 10u128;
+        assert_ok!(DataHavenNativeTransfer::<Test>::lock_tokens(&ALICE, amount));
+
+        // Attempt to withdraw the full sovereign balance, which should leave the account below ED
+        assert_noop!(
+            DataHavenNativeTransfer::<Test>::unlock_tokens(&BOB, amount),
+            Error::<Test>::InsufficientSovereignBalance
         );
     });
 }
@@ -283,7 +300,10 @@ fn lock_unlock_different_amounts() {
             &CHARLIE, 2999
         ));
 
-        assert_eq!(Balances::balance(&ETHEREUM_SOVEREIGN), 1); // Existential deposit remains
+        assert_eq!(
+            Balances::balance(&ETHEREUM_SOVEREIGN),
+            Balances::minimum_balance()
+        ); // Existential deposit remains
         assert_eq!(Balances::balance(&BOB), INITIAL_BALANCE + 2000);
         assert_eq!(Balances::balance(&CHARLIE), INITIAL_BALANCE + 2999);
     });
diff --git a/operator/runtime/mainnet/tests/native_token_transfer.rs b/operator/runtime/mainnet/tests/native_token_transfer.rs
index 407f83dd..7739b282 100644
--- a/operator/runtime/mainnet/tests/native_token_transfer.rs
+++ b/operator/runtime/mainnet/tests/native_token_transfer.rs
@@ -374,9 +374,10 @@ fn processing_fails_with_insufficient_sovereign_balance() {
 
         setup_sovereign_balance(TRANSFER_AMOUNT / 2); // Insufficient balance
 
-        let result =
-            snowbridge_pallet_inbound_queue_v2::Pallet::<Runtime>::process_message(alice, message);
-        assert!(result.is_err());
+        assert_noop!(
+            snowbridge_pallet_inbound_queue_v2::Pallet::<Runtime>::process_message(alice, message),
+            pallet_datahaven_native_transfer::Error::<Runtime>::InsufficientSovereignBalance
+        );
     });
 }
 
diff --git a/operator/runtime/stagenet/tests/native_token_transfer.rs b/operator/runtime/stagenet/tests/native_token_transfer.rs
index de352f6c..6b96bd88 100644
--- a/operator/runtime/stagenet/tests/native_token_transfer.rs
+++ b/operator/runtime/stagenet/tests/native_token_transfer.rs
@@ -361,9 +361,10 @@ fn processing_fails_with_insufficient_sovereign_balance() {
 
         setup_sovereign_balance(TRANSFER_AMOUNT / 2); // Insufficient balance
 
-        let result =
-            snowbridge_pallet_inbound_queue_v2::Pallet::<Runtime>::process_message(alice, message);
-        assert!(result.is_err());
+        assert_noop!(
+            snowbridge_pallet_inbound_queue_v2::Pallet::<Runtime>::process_message(alice, message),
+            pallet_datahaven_native_transfer::Error::<Runtime>::InsufficientSovereignBalance
+        );
     });
 }
 
diff --git a/operator/runtime/testnet/tests/native_token_transfer.rs b/operator/runtime/testnet/tests/native_token_transfer.rs
index e02fe707..6d5b4234 100644
--- a/operator/runtime/testnet/tests/native_token_transfer.rs
+++ b/operator/runtime/testnet/tests/native_token_transfer.rs
@@ -361,9 +361,10 @@ fn processing_fails_with_insufficient_sovereign_balance() {
 
         setup_sovereign_balance(TRANSFER_AMOUNT / 2); // Insufficient balance
 
-        let result =
-            snowbridge_pallet_inbound_queue_v2::Pallet::<Runtime>::process_message(alice, message);
-        assert!(result.is_err());
+        assert_noop!(
+            snowbridge_pallet_inbound_queue_v2::Pallet::<Runtime>::process_message(alice, message),
+            pallet_datahaven_native_transfer::Error::<Runtime>::InsufficientSovereignBalance
+        );
     });
 }
 
diff --git a/test/.papi/descriptors/package.json b/test/.papi/descriptors/package.json
index 5e04bf6c..f91b756b 100644
--- a/test/.papi/descriptors/package.json
+++ b/test/.papi/descriptors/package.json
@@ -1,5 +1,5 @@
 {
-  "version": "0.1.0-autogenerated.12568285267841290320",
+  "version": "0.1.0-autogenerated.2256885919410986602",
   "name": "@polkadot-api/descriptors",
   "files": [
     "dist"
diff --git a/test/.papi/metadata/datahaven.scale b/test/.papi/metadata/datahaven.scale
index 2ea69d16..4d9188cb 100644
Binary files a/test/.papi/metadata/datahaven.scale and b/test/.papi/metadata/datahaven.scale differ