diff --git a/packages/tenants/src/context/TenantSessionCoordinator.ts b/packages/tenants/src/context/TenantSessionCoordinator.ts
index cdc7428a86..f78a66125a 100644
--- a/packages/tenants/src/context/TenantSessionCoordinator.ts
+++ b/packages/tenants/src/context/TenantSessionCoordinator.ts
@@ -10,6 +10,7 @@ import {
   InjectionSymbols,
   Logger,
   WalletApi,
+  WalletError,
 } from '@aries-framework/core'
 import { Mutex, withTimeout } from 'async-mutex'
 
@@ -180,7 +181,14 @@ export class TenantSessionCoordinator {
 
   private async createAgentContext(tenantRecord: TenantRecord) {
     const tenantDependencyManager = this.rootAgentContext.dependencyManager.createChild()
-    const tenantConfig = this.rootAgentContext.config.extend(tenantRecord.config)
+
+    const tenantConfig = this.rootAgentContext.config.extend({
+      ...tenantRecord.config,
+      walletConfig: {
+        ...this.rootAgentContext.config?.walletConfig,
+        ...tenantRecord.config.walletConfig,
+      },
+    })
 
     const agentContext = new AgentContext({
       contextCorrelationId: tenantRecord.id,
@@ -194,7 +202,11 @@ export class TenantSessionCoordinator {
     // and will also write the storage version to the storage, which is needed by the update assistant. We either
     // need to move this out of the module, or just keep using the module here.
     const walletApi = agentContext.dependencyManager.resolve(WalletApi)
-    await walletApi.initialize(tenantRecord.config.walletConfig)
+
+    if (!tenantConfig.walletConfig) {
+      throw new WalletError('Cannot initialize tenant without Wallet config.')
+    }
+    await walletApi.initialize(tenantConfig.walletConfig)
 
     return agentContext
   }
diff --git a/packages/tenants/src/context/__tests__/TenantSessionCoordinator.test.ts b/packages/tenants/src/context/__tests__/TenantSessionCoordinator.test.ts
index dd659db44c..48653f5655 100644
--- a/packages/tenants/src/context/__tests__/TenantSessionCoordinator.test.ts
+++ b/packages/tenants/src/context/__tests__/TenantSessionCoordinator.test.ts
@@ -1,7 +1,7 @@
 import type { TenantAgentContextMapping } from '../TenantSessionCoordinator'
 import type { DependencyManager } from '@aries-framework/core'
 
-import { AgentContext, AgentConfig, WalletApi } from '@aries-framework/core'
+import { AgentConfig, AgentContext, WalletApi, KeyDerivationMethod } from '@aries-framework/core'
 import { Mutex, withTimeout } from 'async-mutex'
 
 import { getAgentConfig, getAgentContext, mockFunction } from '../../../../core/tests/helpers'
@@ -91,19 +91,18 @@ describe('TenantSessionCoordinator', () => {
         registerInstance: jest.fn(),
         resolve: jest.fn(() => wallet),
       } as unknown as DependencyManager
-      const mockConfig = jest.fn() as unknown as AgentConfig
 
       createChildSpy.mockReturnValue(tenantDependencyManager)
-      extendSpy.mockReturnValue(mockConfig)
 
       const tenantAgentContext = await tenantSessionCoordinator.getContextForSession(tenantRecord)
 
-      expect(wallet.initialize).toHaveBeenCalledWith(tenantRecord.config.walletConfig)
+      const extendedWalletConfig = { ...tenantRecord.config.walletConfig, keyDerivationMethod: KeyDerivationMethod.Raw }
+      expect(wallet.initialize).toHaveBeenCalledWith(extendedWalletConfig)
       expect(tenantSessionMutexMock.acquireSession).toHaveBeenCalledTimes(1)
-      expect(extendSpy).toHaveBeenCalledWith(tenantRecord.config)
+      expect(extendSpy).toHaveBeenCalledWith({ ...tenantRecord.config, walletConfig: extendedWalletConfig })
       expect(createChildSpy).toHaveBeenCalledWith()
       expect(tenantDependencyManager.registerInstance).toHaveBeenCalledWith(AgentContext, expect.any(AgentContext))
-      expect(tenantDependencyManager.registerInstance).toHaveBeenCalledWith(AgentConfig, mockConfig)
+      expect(tenantDependencyManager.registerInstance).toHaveBeenCalledWith(AgentConfig, expect.any(AgentConfig))
 
       expect(tenantSessionCoordinator.tenantAgentContextMapping.tenant1).toEqual({
         agentContext: tenantAgentContext,
@@ -138,7 +137,8 @@ describe('TenantSessionCoordinator', () => {
 
       await expect(tenantSessionCoordinator.getContextForSession(tenantRecord)).rejects.toThrowError('Test error')
 
-      expect(wallet.initialize).toHaveBeenCalledWith(tenantRecord.config.walletConfig)
+      const extendedWalletConfig = { ...tenantRecord.config.walletConfig, keyDerivationMethod: KeyDerivationMethod.Raw }
+      expect(wallet.initialize).toHaveBeenCalledWith(extendedWalletConfig)
       expect(tenantSessionMutexMock.acquireSession).toHaveBeenCalledTimes(1)
       expect(tenantSessionMutexMock.releaseSession).toHaveBeenCalledTimes(1)
     })
@@ -194,8 +194,9 @@ describe('TenantSessionCoordinator', () => {
       })
 
       // Initialize should only be called once
+      const extendedWalletConfig = { ...tenantRecord.config.walletConfig, keyDerivationMethod: KeyDerivationMethod.Raw }
+      expect(wallet.initialize).toHaveBeenCalledWith(extendedWalletConfig)
       expect(wallet.initialize).toHaveBeenCalledTimes(1)
-      expect(wallet.initialize).toHaveBeenCalledWith(tenantRecord.config.walletConfig)
 
       expect(tenantAgentContext1).toBe(tenantAgentContext2)
     })