diff --git a/tests/e2e/main.go b/tests/e2e/main.go
index 5f3ea71e74..d615e4496c 100644
--- a/tests/e2e/main.go
+++ b/tests/e2e/main.go
@@ -95,13 +95,13 @@ var stepChoices = map[string]StepChoice{
 	},
 	"democracy-reward": {
 		name:        "democracy-reward",
-		steps:       democracyRewardsSteps,
+		steps:       democracyRegisteredDenomSteps,
 		description: "democracy tests allowing rewards",
 		testConfig:  DemocracyTestConfig(true),
 	},
 	"democracy": {
 		name:        "democracy",
-		steps:       democracySteps,
+		steps:       democracyUnregisteredDenomSteps,
 		description: "democracy tests",
 		testConfig:  DemocracyTestConfig(false),
 	},
diff --git a/tests/e2e/steps.go b/tests/e2e/steps.go
index 1626df0de2..4ad2f8fd59 100644
--- a/tests/e2e/steps.go
+++ b/tests/e2e/steps.go
@@ -60,20 +60,25 @@ var slashThrottleSteps = concatSteps(
 	stepsStopChain("consu", 2),
 )
 
-var democracyRewardsSteps = concatSteps(
+// these tests start with transfer SendEnabled set to false
+// one of the steps will set SendEnabled to true
+var democracyUnregisteredDenomSteps = concatSteps(
 	// democracySteps requires a transfer channel
 	stepsStartChains([]string{"democ"}, true),
 	// delegation needs to happen so the first VSC packet can be delivered
 	stepsDelegate("democ"),
-	stepsDemocracy("democ"),
+	// the denom is not registered on the provider chain so it will not be distributed as rewards
+	stepsDemocracy("democ", false),
 )
 
-var democracySteps = concatSteps(
+// these tests start with transfer SendEnabled set to true
+var democracyRegisteredDenomSteps = concatSteps(
 	// democracySteps requires a transfer channel
 	stepsStartChains([]string{"democ"}, true),
 	// delegation needs to happen so the first VSC packet can be delivered
 	stepsDelegate("democ"),
-	stepsRewardDenomConsumer("democ"),
+	// the denom is registered on the provider chain so it will be distributed as rewards
+	stepsDemocracy("democ", true),
 )
 
 var multipleConsumers = concatSteps(
diff --git a/tests/e2e/steps_democracy.go b/tests/e2e/steps_democracy.go
index 506b33453c..30288e7ba9 100644
--- a/tests/e2e/steps_democracy.go
+++ b/tests/e2e/steps_democracy.go
@@ -2,7 +2,7 @@ package main
 
 const consumerRewardDenom = "ibc/3C3D7B3BE4ECC85A0E5B52A3AEC3B7DFC2AA9CA47C37821E57020D6807043BE9"
 
-func stepsDemocracy(consumerName string) []Step {
+func stepsDemocracy(consumerName string, expectRegisteredRewardDistribution bool) []Step {
 	return []Step{
 		{
 			Action: RegisterRepresentativeAction{
@@ -62,7 +62,7 @@ func stepsDemocracy(consumerName string) []Step {
 			},
 		},
 		{
-			// whitelisted legacy proposal can only handle ibctransfer.SendEnabled/ReceiveEnabled
+			// this proposal will allow ibc transfer by setting SendEnabled to true
 			Action: SubmitParamChangeLegacyProposalAction{
 				Chain:    ChainID(consumerName),
 				From:     ValidatorID("alice"),
@@ -181,12 +181,13 @@ func stepsDemocracy(consumerName string) []Step {
 			},
 			State: State{
 				ChainID("provi"): ChainState{
-					// Check that tokens are minted and sent to provider chain and distributed to validators and their delegators on provider chain
+					// Check that ARE NOT minted and sent to provider chain and distributed to validators and their delegators on provider chain
+					// the tokens are not sent because the test configuration does not allow sending tokens
 					Rewards: &Rewards{
 						IsRewarded: map[ValidatorID]bool{
-							ValidatorID("alice"): true,
-							ValidatorID("bob"):   true,
-							ValidatorID("carol"): true,
+							ValidatorID("alice"): expectRegisteredRewardDistribution,
+							ValidatorID("bob"):   expectRegisteredRewardDistribution,
+							ValidatorID("carol"): expectRegisteredRewardDistribution,
 						},
 						IsIncrementalReward: false,
 						IsNativeDenom:       false,
diff --git a/tests/e2e/steps_reward_denom.go b/tests/e2e/steps_reward_denom.go
deleted file mode 100644
index 657508cd1b..0000000000
--- a/tests/e2e/steps_reward_denom.go
+++ /dev/null
@@ -1,308 +0,0 @@
-package main
-
-func stepsRewardDenomConsumer(consumerName string) []Step {
-	return []Step{
-		{
-			Action: RegisterRepresentativeAction{
-				Chain:           ChainID(consumerName),
-				Representatives: []ValidatorID{ValidatorID("alice"), ValidatorID("bob")},
-				Stakes:          []uint{100000000, 40000000},
-			},
-			State: State{
-				ChainID(consumerName): ChainState{
-					StakedTokens: &map[ValidatorID]uint{
-						ValidatorID("alice"): 100000000,
-						ValidatorID("bob"):   40000000,
-					},
-					Rewards: &Rewards{
-						IsRewarded: map[ValidatorID]bool{
-							ValidatorID("alice"): true,
-							ValidatorID("bob"):   true,
-							ValidatorID("carol"): false,
-						},
-						IsIncrementalReward: true,
-						IsNativeDenom:       true,
-					},
-				},
-			},
-		},
-		{
-			Action: DelegateTokensAction{
-				Chain:  ChainID(consumerName),
-				From:   ValidatorID("carol"),
-				To:     ValidatorID("alice"),
-				Amount: 500000,
-			},
-			State: State{
-				ChainID(consumerName): ChainState{
-					// Check that delegators on gov-consumer chain can change representative powers
-					StakedTokens: &map[ValidatorID]uint{
-						ValidatorID("alice"): 100500000,
-						ValidatorID("bob"):   40000000,
-					},
-					// Check that delegating on gov-consumer does not change validator powers
-					ValPowers: &map[ValidatorID]uint{
-						ValidatorID("alice"): 511,
-						ValidatorID("bob"):   500,
-						ValidatorID("carol"): 500,
-					},
-					// Check that tokens are minted and distributed to representatives and their delegators
-					Rewards: &Rewards{
-						IsRewarded: map[ValidatorID]bool{
-							ValidatorID("alice"): true,
-							ValidatorID("bob"):   true,
-							ValidatorID("carol"): true,
-						},
-						IsIncrementalReward: true,
-						IsNativeDenom:       true,
-					},
-				},
-			},
-		},
-		{
-			// whitelisted legacy proposal can only handle ibctransfer.SendEnabled/ReceiveEnabled
-			Action: SubmitParamChangeLegacyProposalAction{
-				Chain:    ChainID(consumerName),
-				From:     ValidatorID("alice"),
-				Deposit:  10000001,
-				Subspace: "transfer",
-				Key:      "SendEnabled",
-				Value:    true,
-			},
-			State: State{
-				ChainID(consumerName): ChainState{
-					ValBalances: &map[ValidatorID]uint{
-						ValidatorID("alice"): 9889999998,
-						ValidatorID("bob"):   9960000001,
-					},
-					// Check that the "SendEnabled" transfer parameter is set to false
-					Params: &([]Param{{Subspace: "transfer", Key: "SendEnabled", Value: "false"}}),
-					Proposals: &map[uint]Proposal{
-						1: ParamsProposal{
-							Deposit:  10000001,
-							Status:   "PROPOSAL_STATUS_VOTING_PERIOD",
-							Subspace: "transfer",
-							Key:      "SendEnabled",
-							Value:    "true",
-						},
-					},
-				},
-			},
-		},
-		{
-			// Have accounts vote on something on the gov-consumer chain
-			Action: VoteGovProposalAction{
-				Chain:      ChainID(consumerName),
-				From:       []ValidatorID{ValidatorID("alice"), ValidatorID("bob")},
-				Vote:       []string{"yes", "no"},
-				PropNumber: 1,
-			},
-			State: State{
-				ChainID(consumerName): ChainState{
-					// Check that alice gets the prop deposit refunded
-					ValBalances: &map[ValidatorID]uint{
-						ValidatorID("alice"): 9899999999,
-						ValidatorID("bob"):   9960000001,
-					},
-					// Check that the prop passed
-					Proposals: &map[uint]Proposal{
-						1: ParamsProposal{
-							Deposit:  10000001,
-							Status:   "PROPOSAL_STATUS_PASSED",
-							Subspace: "transfer",
-							Key:      "SendEnabled",
-							Value:    "true",
-						},
-					},
-					// Check that the parameter is changed on gov-consumer chain
-					Params: &([]Param{{Subspace: "transfer", Key: "SendEnabled", Value: "true"}}),
-				},
-			},
-		},
-		{
-			Action: RelayRewardPacketsToProviderAction{
-				ConsumerChain: ChainID(consumerName),
-				ProviderChain: ChainID("provi"),
-				Port:          "transfer",
-				Channel:       1,
-			},
-			State: State{
-				ChainID("provi"): ChainState{
-					// Check that tokens are not distributed before the denom has been registered
-					Rewards: &Rewards{
-						IsRewarded: map[ValidatorID]bool{
-							ValidatorID("alice"): false,
-							ValidatorID("bob"):   false,
-							ValidatorID("carol"): false,
-						},
-						IsIncrementalReward: false,
-						IsNativeDenom:       false,
-					},
-					// Check that the denom is not registered on provider chain
-					RegisteredConsumerRewardDenoms: &[]string{},
-				},
-			},
-		},
-		{
-			Action: SubmitChangeRewardDenomsProposalAction{
-				Denom:   "ibc/3C3D7B3BE4ECC85A0E5B52A3AEC3B7DFC2AA9CA47C37821E57020D6807043BE9",
-				Deposit: 10000001,
-				From:    ValidatorID("bob"),
-			},
-			State: State{
-				ChainID("provi"): ChainState{
-					// Denom not yet registered, gov prop needs to pass first
-					RegisteredConsumerRewardDenoms: &[]string{},
-				},
-			},
-		},
-		{
-			Action: VoteGovProposalAction{
-				Chain:      ChainID("provi"),
-				From:       []ValidatorID{ValidatorID("alice"), ValidatorID("bob"), ValidatorID("carol")},
-				Vote:       []string{"yes", "yes", "yes"},
-				PropNumber: 2,
-			},
-			State: State{
-				ChainID("provi"): ChainState{
-					// Check that the denom is registered on provider chain
-					RegisteredConsumerRewardDenoms: &[]string{"ibc/3C3D7B3BE4ECC85A0E5B52A3AEC3B7DFC2AA9CA47C37821E57020D6807043BE9"},
-				},
-			},
-		},
-		{
-			Action: RelayRewardPacketsToProviderAction{
-				ConsumerChain: ChainID(consumerName),
-				ProviderChain: ChainID("provi"),
-				Port:          "transfer",
-				Channel:       1,
-			},
-			State: State{
-				ChainID("provi"): ChainState{
-					// Check that tokens are not minted and sent to provider chain and distributed to validators and their delegators on provider chain
-					Rewards: &Rewards{
-						IsRewarded: map[ValidatorID]bool{
-							ValidatorID("alice"): false,
-							ValidatorID("bob"):   false,
-							ValidatorID("carol"): false,
-						},
-						IsIncrementalReward: false,
-						IsNativeDenom:       false,
-					},
-				},
-			},
-		},
-		{
-			Action: DowntimeSlashAction{
-				Chain:     ChainID(consumerName),
-				Validator: ValidatorID("bob"),
-			},
-			State: State{
-				// validator should be slashed on consumer, powers not affected on either chain yet
-				ChainID("provi"): ChainState{
-					ValPowers: &map[ValidatorID]uint{
-						ValidatorID("alice"): 511,
-						ValidatorID("bob"):   500,
-						ValidatorID("carol"): 500,
-					},
-				},
-				ChainID(consumerName): ChainState{
-					ValPowers: &map[ValidatorID]uint{
-						ValidatorID("alice"): 511,
-						ValidatorID("bob"):   500,
-						ValidatorID("carol"): 500,
-					},
-				},
-			},
-		},
-		{
-			Action: RelayPacketsAction{
-				ChainA:  ChainID("provi"),
-				ChainB:  ChainID(consumerName),
-				Port:    "provider",
-				Channel: 0,
-			},
-			State: State{
-				ChainID("provi"): ChainState{
-					ValPowers: &map[ValidatorID]uint{
-						ValidatorID("alice"): 511,
-						// Downtime jailing and corresponding voting power change are processed by provider
-						ValidatorID("bob"):   0,
-						ValidatorID("carol"): 500,
-					},
-				},
-				ChainID(consumerName): ChainState{
-					ValPowers: &map[ValidatorID]uint{
-						ValidatorID("alice"): 511,
-						ValidatorID("bob"):   500,
-						ValidatorID("carol"): 500,
-					},
-				},
-			},
-		},
-		// A block is incremented each Action, hence why VSC is committed on provider,
-		// and can now be relayed as packet to consumer
-		{
-			Action: RelayPacketsAction{
-				ChainA:  ChainID("provi"),
-				ChainB:  ChainID(consumerName),
-				Port:    "provider",
-				Channel: 0,
-			},
-			State: State{
-				ChainID(consumerName): ChainState{
-					ValPowers: &map[ValidatorID]uint{
-						ValidatorID("alice"): 511,
-						// VSC now seen on consumer
-						ValidatorID("bob"):   0,
-						ValidatorID("carol"): 500,
-					},
-				},
-			},
-		},
-		{
-			Action: UnjailValidatorAction{
-				Provider:  ChainID("provi"),
-				Validator: ValidatorID("bob"),
-			},
-			State: State{
-				ChainID("provi"): ChainState{
-					ValPowers: &map[ValidatorID]uint{
-						ValidatorID("alice"): 511,
-						ValidatorID("bob"):   500,
-						ValidatorID("carol"): 500,
-					},
-				},
-				ChainID(consumerName): ChainState{
-					ValPowers: &map[ValidatorID]uint{
-						ValidatorID("alice"): 511,
-						ValidatorID("bob"):   0,
-						ValidatorID("carol"): 500,
-					},
-				},
-			},
-		},
-		{
-			Action: RelayPacketsAction{
-				ChainA:  ChainID("provi"),
-				ChainB:  ChainID(consumerName),
-				Port:    "provider",
-				Channel: 0,
-			},
-			State: State{
-				ChainID(consumerName): ChainState{
-					ValPowers: &map[ValidatorID]uint{
-						ValidatorID("alice"): 511,
-						ValidatorID("bob"):   500,
-						ValidatorID("carol"): 500,
-					},
-					// Check that slashing on the gov-consumer chain does not result in slashing for the representatives or their delegators
-					StakedTokens: &map[ValidatorID]uint{
-						ValidatorID("alice"): 100500000,
-						ValidatorID("bob"):   40000000,
-					},
-				},
-			},
-		},
-	}
-}
diff --git a/tests/e2e/trace_handlers_test.go b/tests/e2e/trace_handlers_test.go
index 4352c2a1b3..9b83d1c774 100644
--- a/tests/e2e/trace_handlers_test.go
+++ b/tests/e2e/trace_handlers_test.go
@@ -45,11 +45,11 @@ func TestWriterThenParser(t *testing.T) {
 		"proposalInState":       {proposalInStateSteps},
 		"start_provider_chain":  {stepStartProviderChain()},
 		"happyPath":             {happyPathSteps},
-		"democracy":             {democracySteps},
+		"democracy":             {democracyUnregisteredDenomSteps},
 		"slashThrottle":         {slashThrottleSteps},
 		"multipleConsumers":     {multipleConsumers},
 		"shorthappy":            {shortHappyPathSteps},
-		"democracyRewardsSteps": {democracyRewardsSteps},
+		"democracyRewardsSteps": {democracyRegisteredDenomSteps},
 		"changeover":            {changeoverSteps},
 	}
 
@@ -76,11 +76,11 @@ func TestWriteExamples(t *testing.T) {
 		trace []Step
 	}{
 		"happyPath":             {happyPathSteps},
-		"democracy":             {democracySteps},
+		"democracy":             {democracyUnregisteredDenomSteps},
 		"slashThrottle":         {slashThrottleSteps},
 		"multipleConsumers":     {multipleConsumers},
 		"shorthappy":            {shortHappyPathSteps},
-		"democracyRewardsSteps": {democracyRewardsSteps},
+		"democracyRewardsSteps": {democracyRegisteredDenomSteps},
 		"changeover":            {changeoverSteps},
 		"consumer-misbehaviour": {consumerMisbehaviourSteps},
 		"consumer-double-sign":  {consumerDoubleSignSteps},