diff --git a/src/libxrpl/tx/transactors/token/MPTokenIssuanceSet.cpp b/src/libxrpl/tx/transactors/token/MPTokenIssuanceSet.cpp
index 339a9ba894..8646d69302 100644
--- a/src/libxrpl/tx/transactors/token/MPTokenIssuanceSet.cpp
+++ b/src/libxrpl/tx/transactors/token/MPTokenIssuanceSet.cpp
@@ -86,7 +86,10 @@ MPTokenIssuanceSet::preflight(PreflightContext const& ctx)
     if (isMutate && !ctx.rules.enabled(featureDynamicMPT))
         return temDISABLED;
 
-    if ((hasIssuerElGamalKey || hasAuditorElGamalKey || enablePrivacy) &&
+    bool const setConfidentialBalanceImmutable =
+        immutableFlags && (*immutableFlags & tifMPTCanHoldConfidentialBalance) != 0u;
+    if ((hasIssuerElGamalKey || hasAuditorElGamalKey || enablePrivacy ||
+         setConfidentialBalanceImmutable) &&
         !ctx.rules.enabled(featureConfidentialTransfer))
         return temDISABLED;
 
@@ -134,6 +137,8 @@ MPTokenIssuanceSet::preflight(PreflightContext const& ctx)
         if (metadata && metadata->length() > kMaxMpTokenMetadataLength)
             return temMALFORMED;
 
+        // If the immutable flags field is included, at least one flag must be
+        // specified, and undefined flags must not be specified.
         if (immutableFlags &&
             ((*immutableFlags == 0u) ||
              ((*immutableFlags & tifMPTokenIssuanceCreateImmutableMask) != 0u)))
diff --git a/src/test/app/MPToken_test.cpp b/src/test/app/MPToken_test.cpp
index 376eae06ad..44298e8d43 100644
--- a/src/test/app/MPToken_test.cpp
+++ b/src/test/app/MPToken_test.cpp
@@ -3963,6 +3963,19 @@ class MPToken_test : public beast::unit_test::Suite
                 {.account = alice, .immutableFlags = tifMPTCanClawback, .err = temDISABLED});
         }
 
+        // ImmutableFlags containing tifMPTCanHoldConfidentialBalance requires
+        // featureConfidentialTransfer.
+        {
+            Env env(*this, features - featureConfidentialTransfer);
+            MPTTester mptAlice(env, alice);
+            mptAlice.create({.ownerCount = 1});
+
+            mptAlice.set(
+                {.account = alice,
+                 .immutableFlags = tifMPTCanHoldConfidentialBalance,
+                 .err = temDISABLED});
+        }
+
         // ImmutableFlags of 0, or containing unknown bits, is rejected.
         {
             Env env(*this, features);