diff --git a/CHANGELOG.md b/CHANGELOG.md
index 53e27d377..38a861f3c 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,13 @@
 # HSD Release Notes & Changelog
 
+## vX.Y.Z
+
+### Wallet API changes
+
+Creating a watch-only wallet now requires an `account-key` (or `accountKey`)
+argument. This is to prevent hsd from generating keys and addresses the user
+can not spend from.
+
 ## v0.0.0
 
 ### Notable Changes
diff --git a/lib/wallet/wallet.js b/lib/wallet/wallet.js
index 03f3f5341..bc34a9d4e 100644
--- a/lib/wallet/wallet.js
+++ b/lib/wallet/wallet.js
@@ -584,7 +584,7 @@ class Wallet extends EventEmitter {
     await this.unlock(passphrase);
 
     let key;
-    if (this.watchOnly && options.accountKey) {
+    if (this.watchOnly) {
       key = options.accountKey;
 
       if (typeof key === 'string')
diff --git a/test/wallet-test.js b/test/wallet-test.js
index 6e42a732a..8f3bad5e4 100644
--- a/test/wallet-test.js
+++ b/test/wallet-test.js
@@ -18,6 +18,8 @@ const KeyRing = require('../lib/primitives/keyring');
 const Input = require('../lib/primitives/input');
 const Outpoint = require('../lib/primitives/outpoint');
 const Script = require('../lib/script/script');
+const HD = require('../lib/hd');
+const PrivateKey = require('../lib/hd/private.js');
 
 const KEY1 = 'xprv9s21ZrQH143K3Aj6xQBymM31Zb4BVc7wxqfUhMZrzewdDVCt'
   + 'qUP9iWfcHgJofs25xbaUpCps9GDXj83NiWvQCAkWQhVj5J4CorfnpKX94AZ';
@@ -35,6 +37,7 @@ let importedWallet = null;
 let importedKey = null;
 let doubleSpendWallet = null;
 let doubleSpendCoin = null;
+let watchWallet = null;
 
 function fromU32(num) {
   const data = Buffer.allocUnsafe(4);
@@ -1175,37 +1178,49 @@ describe('Wallet', function() {
     importedKey = key;
   });
 
+  it('should require account key to create watch only wallet', async () => {
+    try {
+      watchWallet = await wdb.create({
+        watchOnly: true
+      });
+    } catch (e) {
+      assert.strictEqual(
+        e.message,
+        'Must add HD public keys to watch only wallet.'
+      );
+    }
+
+    const privateKey = PrivateKey.generate();
+    const xpub = privateKey.xpubkey('main');
+    watchWallet = await wdb.create({
+      watchOnly: true,
+      accountKey: xpub
+    });
+  });
+
   it('should import pubkey', async () => {
     const key = KeyRing.generate();
     const pub = new KeyRing(key.publicKey);
 
-    const wallet = await wdb.create({
-      watchOnly: true
-    });
+    await watchWallet.importKey('default', pub);
 
-    await wallet.importKey('default', pub);
-
-    const path = await wallet.getPath(pub.getHash());
+    const path = await watchWallet.getPath(pub.getHash());
     assert.bufferEqual(path.hash, pub.getHash());
 
-    const wkey = await wallet.getKey(pub.getHash());
+    const wkey = await watchWallet.getKey(pub.getHash());
     assert(wkey);
   });
 
   it('should import address', async () => {
     const key = KeyRing.generate();
 
-    const wallet = await wdb.create({
-      watchOnly: true
-    });
-
-    await wallet.importAddress('default', key.getAddress());
+    await watchWallet.importAddress('default', key.getAddress());
 
-    const path = await wallet.getPath(key.getHash());
+    const path = await watchWallet.getPath(key.getHash());
     assert(path);
     assert.bufferEqual(path.hash, key.getHash());
 
-    const wkey = await wallet.getKey(key.getHash());
+    const wkey = await watchWallet.getKey(key.getHash());
     assert(!wkey);
   });