diff --git a/modules/bitgo/test/v2/unit/keychains.ts b/modules/bitgo/test/v2/unit/keychains.ts
index 07eed600e7..da7d9870c2 100644
--- a/modules/bitgo/test/v2/unit/keychains.ts
+++ b/modules/bitgo/test/v2/unit/keychains.ts
@@ -292,7 +292,8 @@ describe('V2 Keychains', function () {
         assert.ok(Object.keys(keys).length === expectedLength, 'should have the expected number of keys');
         for (const [key, value] of Object.entries(keys)) {
           assert.ok(key.includes('xpub') || key.includes('randomid'), 'key should be xpub or randomid');
-          const decryptedPrv = await bitgo.decrypt({ input: value, password: newPassword });
+          JSON.parse(value as string).v.should.equal(2, 'password change must always emit v2 envelopes');
+          const decryptedPrv = await bitgo.decrypt({ input: value as string, password: newPassword });
           decryptedPrv.should.startWith('xprv');
         }
       };
@@ -390,7 +391,7 @@ describe('V2 Keychains', function () {
         decryptedPrv.should.equal(prv);
       });
 
-      it('single keychain password update preserves v2 (Argon2id) envelope', async () => {
+      it('single keychain password update emits a v2 (Argon2id) envelope for a v2 input', async () => {
         const prv = 'xprvtest-v2';
         const encryptedPrv = await bitgo.encrypt({ input: prv, password: oldPassword, encryptionVersion: 2 });
         const envelope = JSON.parse(encryptedPrv);
@@ -408,7 +409,42 @@ describe('V2 Keychains', function () {
         await bitgo.decrypt({ input: newKeychain.encryptedPrv, password: oldPassword }).should.be.rejected();
       });
 
-      it('updatePassword handles a mix of v1 and v2 keychains', async function () {
+      it('single keychain password update upgrades a v1 (SJCL) envelope to v2', async () => {
+        const prv = 'xprvtest-v1';
+        const encryptedPrv = await bitgo.encrypt({ input: prv, password: oldPassword, encryptionVersion: 1 });
+        JSON.parse(encryptedPrv).should.not.have.property('v', 2, 'pre-condition: input must not be v2');
+
+        const keychain = { xpub: 'xpub123', encryptedPrv };
+        const newKeychain = await keychains.updateSingleKeychainPassword({ keychain, oldPassword, newPassword });
+
+        const newEnvelope = JSON.parse(newKeychain.encryptedPrv);
+        newEnvelope.v.should.equal(2, 'v1 keychain must be upgraded to v2 after password change');
+
+        const decryptedPrv = await bitgo.decrypt({ input: newKeychain.encryptedPrv, password: newPassword });
+        decryptedPrv.should.equal(prv, 'new password must decrypt to original prv');
+
+        await bitgo.decrypt({ input: newKeychain.encryptedPrv, password: oldPassword }).should.be.rejected();
+      });
+
+      it('single keychain password update keeps a v1 envelope as v1 when encryptionVersion: 1 is passed', async () => {
+        const prv = 'xprvtest-v1-opt-out';
+        const encryptedPrv = await bitgo.encrypt({ input: prv, password: oldPassword, encryptionVersion: 1 });
+
+        const keychain = { xpub: 'xpub123', encryptedPrv };
+        const newKeychain = await keychains.updateSingleKeychainPassword({
+          keychain,
+          oldPassword,
+          newPassword,
+          encryptionVersion: 1,
+        });
+
+        JSON.parse(newKeychain.encryptedPrv).should.not.have.property('v', 2, 'v1 opt-out must not emit v2');
+
+        const decryptedPrv = await bitgo.decrypt({ input: newKeychain.encryptedPrv, password: newPassword });
+        decryptedPrv.should.equal(prv, 'new password must decrypt to original prv');
+      });
+
+      it('updatePassword upgrades v1 keychains to v2 and keeps v2 keychains as v2', async function () {
         const v1Prv = 'xprv-v1';
         const v2Prv = 'xprv-v2';
 
@@ -445,10 +481,11 @@ describe('V2 Keychains', function () {
         assert.ok(updatedV1, 'v1 keychain must be in the result');
         assert.ok(updatedV2, 'v2 keychain must be in the result');
 
-        (await bitgo.decrypt({ input: updatedV1, password: newPassword })).should.equal(v1Prv);
+        JSON.parse(updatedV1).v.should.equal(2, 'v1 keychain must be upgraded to v2 on password change');
+        const decryptedV1 = await bitgo.decrypt({ input: updatedV1, password: newPassword });
+        decryptedV1.should.equal(v1Prv);
 
-        const updatedV2Envelope = JSON.parse(updatedV2);
-        updatedV2Envelope.v.should.equal(2, 'v2 keychain must remain v2 after password change');
+        JSON.parse(updatedV2).v.should.equal(2, 'v2 keychain must remain v2 after password change');
         const decryptedV2 = await bitgo.decrypt({ input: updatedV2, password: newPassword });
         decryptedV2.should.equal(v2Prv);
       });
diff --git a/modules/sdk-core/src/bitgo/keychain/iKeychains.ts b/modules/sdk-core/src/bitgo/keychain/iKeychains.ts
index 70a4d12d73..8af222cc30 100644
--- a/modules/sdk-core/src/bitgo/keychain/iKeychains.ts
+++ b/modules/sdk-core/src/bitgo/keychain/iKeychains.ts
@@ -93,12 +93,23 @@ export interface ListKeychainOptions {
 export interface UpdatePasswordOptions {
   oldPassword: string;
   newPassword: string;
+  /**
+   * Envelope version to emit for the re-encrypted keychains. Defaults to `2` (Argon2id),
+   * so v1 (SJCL) keychains are transparently upgraded to v2 as part of the password change.
+   * Pass `1` to keep emitting legacy v1 envelopes (used by the UI until the Sept 15 breaking-change window closes).
+   */
+  encryptionVersion?: EncryptionVersion;
 }
 
 export interface UpdateSingleKeychainPasswordOptions {
   keychain?: Keychain;
   oldPassword?: string;
   newPassword?: string;
+  /**
+   * Envelope version to emit. Defaults to `2` (Argon2id).
+   * Pass `1` to keep emitting legacy v1 (SJCL) envelopes.
+   */
+  encryptionVersion?: EncryptionVersion;
 }
 
 /**
diff --git a/modules/sdk-core/src/bitgo/keychain/keychains.ts b/modules/sdk-core/src/bitgo/keychain/keychains.ts
index 63a7962efb..65ab406420 100644
--- a/modules/sdk-core/src/bitgo/keychain/keychains.ts
+++ b/modules/sdk-core/src/bitgo/keychain/keychains.ts
@@ -119,6 +119,7 @@ export class Keychains implements IKeychains {
             keychain: key,
             oldPassword: params.oldPassword,
             newPassword: params.newPassword,
+            encryptionVersion: params.encryptionVersion,
           });
           if (updatedKeychain.encryptedPrv) {
             // Both TSS and multi-user-ofc keys have multiple public keys in their key document and thus need to use objectID
@@ -174,12 +175,15 @@ export class Keychains implements IKeychains {
   }
 
   /**
-   * Update the password used to decrypt a single keychain, with support for v2 (Argon2id) envelopes.
-   * Automatically detects and preserves the envelope version — a v2-encrypted key stays v2 after the password change.
+   * Update the password used to decrypt a single keychain. Defaults to re-encrypting as v2
+   * (Argon2id + AES-256-GCM), so v1 (SJCL) keychains are transparently upgraded to v2 as part
+   * of the password change. Callers that still need v1 output (e.g. the UI until the Sept 15
+   * breaking-change window closes) can pass `encryptionVersion: 1`.
    * @param params
    * @param params.keychain - The keychain whose password should be updated
    * @param params.oldPassword - The old password used for encrypting the key
    * @param params.newPassword - The new password to be used for encrypting the key
+   * @param params.encryptionVersion - Optional envelope version to emit; defaults to 2 (Argon2id)
    * @returns {Promise<Keychain>}
    */
   async updateSingleKeychainPassword(params: UpdateSingleKeychainPasswordOptions = {}): Promise<Keychain> {
@@ -198,11 +202,10 @@ export class Keychains implements IKeychains {
     const oldEncryptedPrv = params.keychain.encryptedPrv;
     try {
       const decryptedPrv = await this.bitgo.decrypt({ input: oldEncryptedPrv, password: params.oldPassword });
-      const encryptionVersion = this.getEncryptionVersion(oldEncryptedPrv);
       const newEncryptedPrv = await this.bitgo.encrypt({
         input: decryptedPrv,
         password: params.newPassword,
-        encryptionVersion,
+        encryptionVersion: params.encryptionVersion ?? 2,
       });
       return _.assign({}, params.keychain, { encryptedPrv: newEncryptedPrv });
     } catch (e) {