diff --git a/packages/state/src/hooks/labels.test.ts b/packages/state/src/hooks/labels.test.ts
index 2ddc953f10..00d8ed6969 100644
--- a/packages/state/src/hooks/labels.test.ts
+++ b/packages/state/src/hooks/labels.test.ts
@@ -9,7 +9,7 @@ import {
 } from "@umami/core";
 import { MAINNET } from "@umami/tezos";
 
-import { useGetNextAvailableAccountLabels, useValidateName } from "./labels";
+import { PROHIBITED_CHARACTERS, useGetNextAvailableAccountLabels, useValidateName } from "./labels";
 import { contactsActions, multisigsActions, networksActions } from "../slices";
 import { type UmamiStore, makeStore } from "../store";
 import { addTestAccounts, renderHook } from "../testUtils";
@@ -22,6 +22,22 @@ beforeEach(() => {
 
 describe("labelsHooks", () => {
   describe("useValidateName", () => {
+    it.each(PROHIBITED_CHARACTERS)("fails if name contains `%s` special character", char => {
+      const {
+        result: { current: validateName },
+      } = renderHook(() => useValidateName(), { store });
+
+      expect(validateName(`Some ${char} name`)).toEqual("Name contains special character(s)");
+    });
+
+    it("fails if name exceeds 256 characters", () => {
+      const {
+        result: { current: validateName },
+      } = renderHook(() => useValidateName(), { store });
+
+      expect(validateName("a".repeat(257))).toEqual("Name should not exceed 256 characters");
+    });
+
     describe.each([
       { testCase: "with trailing whitespaces", withWhitespaces: true },
       { testCase: "without trailing whitespaces", withWhitespaces: false },
diff --git a/packages/state/src/hooks/labels.ts b/packages/state/src/hooks/labels.ts
index 7cd545cefc..c5d9452791 100644
--- a/packages/state/src/hooks/labels.ts
+++ b/packages/state/src/hooks/labels.ts
@@ -1,12 +1,20 @@
 import { useAllContacts } from "./contacts";
 import { useAllAccounts } from "./getAccountData";
 
+export const PROHIBITED_CHARACTERS = ["<", ">", '"', "'", "&", "/", "\\", "\t", "\n", "\r", "`"];
+
 /** Hook for validating name for account or contact. */
 export const useValidateName = (oldName?: string | undefined) => {
   const isUniqueLabel = useIsUniqueLabel();
 
   return (name: string) => {
     const trimmedName = name.trim();
+    if (trimmedName.length > 256) {
+      return "Name should not exceed 256 characters";
+    }
+    if (PROHIBITED_CHARACTERS.some(char => trimmedName.includes(char))) {
+      return "Name contains special character(s)";
+    }
     if (trimmedName.length === 0) {
       return "Name should not be empty";
     }