diff --git a/packages/p2p-v2/src/components/Modals/BlockUnblockUserModal/__tests__/BlockUnblockUserModal.spec.tsx b/packages/p2p-v2/src/components/Modals/BlockUnblockUserModal/__tests__/BlockUnblockUserModal.spec.tsx
new file mode 100644
index 000000000000..5bb7d4dbebbd
--- /dev/null
+++ b/packages/p2p-v2/src/components/Modals/BlockUnblockUserModal/__tests__/BlockUnblockUserModal.spec.tsx
@@ -0,0 +1,108 @@
+import React from 'react';
+import { APIProvider } from '@deriv/api';
+import { render, screen } from '@testing-library/react';
+import userEvent from '@testing-library/user-event';
+import BlockUnblockUserModal from '../BlockUnblockUserModal';
+
+const wrapper = ({ children }: { children: JSX.Element }) => (
+    <APIProvider>
+        <div id='v2_modal_root' />
+        {children}
+    </APIProvider>
+);
+
+const mockOnRequestClose = jest.fn();
+const mockUseBlockMutate = jest.fn();
+const mockUseUnblockMutate = jest.fn();
+
+jest.mock('@deriv/api', () => ({
+    ...jest.requireActual('@deriv/api'),
+    p2p: {
+        counterparty: {
+            useBlock: jest.fn(() => ({
+                mutate: mockUseBlockMutate,
+            })),
+            useUnblock: jest.fn(() => ({
+                mutate: mockUseUnblockMutate,
+            })),
+        },
+    },
+}));
+
+describe('BlockUnblockUserModal', () => {
+    it('should render the modal with correct title and behaviour for blocking user', () => {
+        render(
+            <BlockUnblockUserModal
+                advertiserName='Jane Doe'
+                id='1'
+                isBlocked={false}
+                isModalOpen={true}
+                onRequestClose={mockOnRequestClose}
+            />,
+            {
+                wrapper,
+            }
+        );
+
+        expect(
+            screen.queryByText(
+                `You won't see Jane Doe's ads anymore and they won't be able to place orders on your ads.`
+            )
+        ).toBeVisible();
+
+        const blockBtn = screen.getByRole('button', {
+            name: 'Block',
+        });
+        userEvent.click(blockBtn);
+
+        expect(mockUseBlockMutate).toBeCalledWith([1]);
+    });
+    it('should render the modal with correct title and behaviour for unblocking user', () => {
+        render(
+            <BlockUnblockUserModal
+                advertiserName='Hu Tao'
+                id='2'
+                isBlocked={true}
+                isModalOpen={true}
+                onRequestClose={mockOnRequestClose}
+            />,
+            {
+                wrapper,
+            }
+        );
+
+        expect(
+            screen.queryByText(
+                `You will be able to see Hu Tao's ads. They'll be able to place orders on your ads, too.`
+            )
+        ).toBeVisible();
+
+        const unblockBtn = screen.getByRole('button', {
+            name: 'Unblock',
+        });
+        userEvent.click(unblockBtn);
+
+        expect(mockUseUnblockMutate).toBeCalledWith([2]);
+    });
+    it('should hide the modal when user clicks cancel', () => {
+        render(
+            <BlockUnblockUserModal
+                advertiserName='Hu Tao'
+                id='2'
+                isBlocked={true}
+                isModalOpen={true}
+                onRequestClose={mockOnRequestClose}
+            />,
+            {
+                wrapper,
+            }
+        );
+
+        const cancelBtn = screen.getByRole('button', {
+            name: 'Cancel',
+        });
+        userEvent.click(cancelBtn);
+
+        expect(mockOnRequestClose).toBeCalled();
+    });
+});