diff --git a/packages/beacon-ui/src/ui/alert/hooks/useWallets.test.tsx b/packages/beacon-ui/src/ui/alert/hooks/useWallets.test.tsx
new file mode 100644
index 000000000..ecf472d30
--- /dev/null
+++ b/packages/beacon-ui/src/ui/alert/hooks/useWallets.test.tsx
@@ -0,0 +1,243 @@
+import { renderHook, act, waitFor } from '@testing-library/react'
+import useWallets from './useWallets'
+import { PostMessageTransport } from '@airgap/beacon-transport-postmessage'
+import { NetworkType } from '@airgap/beacon-types'
+
+// =====================================================================
+// Mock the wallet utilities with a simple transformation so that the final
+// wallet objects match the MergedWallet interface.
+jest.mock('../../../utils/wallets', () => ({
+  parseWallets: jest.fn((wallets) =>
+    wallets.map((wallet: any) => ({
+      id: wallet.id,
+      key: wallet.key,
+      name: wallet.name,
+      image: wallet.image,
+      // Transform singular fields into arrays.
+      descriptions: wallet.description ? [wallet.description] : [],
+      types: wallet.type ? [wallet.type] : [],
+      links: wallet.link ? [wallet.link] : [],
+      deepLink: wallet.deepLink,
+      supportedInteractionStandards: wallet.supportedInteractionStandards
+    }))
+  ),
+  mergeWallets: jest.fn((wallets: any) => wallets),
+  arrangeTopWallets: jest.fn((wallets: any, featuredWallets: any) => wallets)
+}))
+
+// =====================================================================
+// Provide dummy wallet lists for testing.
+const dummyDesktopList = [
+  {
+    key: 'desktopWallet',
+    name: 'Desktop Wallet',
+    shortName: 'Desktop',
+    logo: 'desktop.png',
+    supportedInteractionStandards: [],
+    downloadLink: 'http://download.desktop',
+    deepLink: 'desktop://app'
+  }
+]
+
+const dummyExtensionList = [
+  {
+    id: 'extWallet',
+    key: 'extWallet',
+    shortName: 'Extension',
+    logo: 'ext.png',
+    supportedInteractionStandards: [],
+    link: 'http://extension.link'
+  }
+]
+
+const dummyIOSList = [
+  {
+    key: 'iosWallet',
+    shortName: 'iOS',
+    logo: 'ios.png',
+    supportedInteractionStandards: [],
+    universalLink: 'http://ios.universal',
+    deepLink: 'ios://app'
+  }
+]
+
+const dummyWebList = [
+  {
+    key: 'webWallet',
+    shortName: 'Web',
+    logo: 'web.png',
+    supportedInteractionStandards: [],
+    links: {
+      mainnet: 'http://web.mainnet',
+      ghostnet: 'http://web.testnet'
+    }
+  }
+]
+
+// Mock the module that exports the wallet lists.
+jest.mock('../wallet-lists', () => ({
+  desktopList: dummyDesktopList,
+  extensionList: dummyExtensionList,
+  iOSList: dummyIOSList,
+  webList: dummyWebList
+}))
+
+// =====================================================================
+// Mock PostMessageTransport so we can control the returned available extensions.
+jest.mock('@airgap/beacon-transport-postmessage', () => ({
+  PostMessageTransport: {
+    getAvailableExtensions: jest.fn()
+  }
+}))
+
+// =====================================================================
+// Create a controlled mock for windowRef event listeners.
+let messageHandler: any = null
+const mockAddEventListener = jest.fn((event, handler) => {
+  if (event === 'message') {
+    messageHandler = handler
+  }
+})
+const mockRemoveEventListener = jest.fn((event, handler) => {
+  if (event === 'message' && messageHandler === handler) {
+    messageHandler = null
+  }
+})
+
+// Renamed variables starting with "mock" are allowed in module factory.
+jest.mock('@airgap/beacon-core', () => ({
+  windowRef: {
+    addEventListener: (event: any, handler: any) => mockAddEventListener(event, handler),
+    removeEventListener: (event: any, handler: any) => mockRemoveEventListener(event, handler)
+  }
+}))
+
+// =====================================================================
+// Begin tests
+describe('useWallets hook', () => {
+  beforeEach(() => {
+    jest.clearAllMocks()
+    messageHandler = null
+  })
+
+  test('fetches available extensions on mount and returns a wallet map', async () => {
+    // Set up the mock to return an extension that is not already in extensionList.
+    const fakeExtension = {
+      id: 'newExt',
+      name: 'New Extension',
+      shortName: 'NewExt',
+      iconUrl: 'new.png',
+      link: 'http://new.link'
+    }
+
+    ;(PostMessageTransport.getAvailableExtensions as any).mockResolvedValueOnce([fakeExtension])
+
+    // Render the hook.
+    const { result } = renderHook(() => useWallets())
+
+    // Wait for the async effect (fetching available extensions) to complete.
+    await waitFor(() => {
+      const walletMap = result.current
+      return walletMap instanceof Map && walletMap.size === 5
+    })
+
+    const walletMap = result.current
+    expect(walletMap).toBeInstanceOf(Map)
+    expect(walletMap.size).toBe(5)
+    expect(walletMap.has('desktopWallet')).toBe(true)
+    expect(walletMap.has('extWallet')).toBe(true)
+    expect(walletMap.has('iosWallet')).toBe(true)
+    expect(walletMap.has('webWallet')).toBe(true)
+    expect(walletMap.has('newExt')).toBe(true)
+
+    // Check one wallet's properties.
+    const desktopWallet = walletMap.get('desktopWallet')
+    expect(desktopWallet).toMatchObject({
+      id: 'desktopWallet',
+      name: 'Desktop',
+      descriptions: ['Desktop App'],
+      types: ['desktop'],
+      links: ['http://download.desktop'],
+      deepLink: 'desktop://app'
+    })
+  })
+
+  test('updates available extensions on "extensionsUpdated" message event', async () => {
+    // Initially return an empty array.
+    ;(PostMessageTransport.getAvailableExtensions as any).mockResolvedValueOnce([])
+
+    const { result } = renderHook(() => useWallets())
+
+    // Wait for the initial effect.
+    await waitFor(() => result.current instanceof Map)
+
+    // Initially, the wallet map should not include any extra extension.
+    expect(result.current.has('updatedExt')).toBe(false)
+
+    // Now, simulate receiving an "extensionsUpdated" message with new extension data.
+    const updatedExtension = {
+      id: 'updatedExt',
+      name: 'Updated Extension',
+      shortName: 'UpdatedExt',
+      iconUrl: 'updated.png',
+      link: 'http://updated.link'
+    }
+    // Set up the mock to return the updated extension.
+    ;(PostMessageTransport.getAvailableExtensions as any).mockResolvedValueOnce([updatedExtension])
+
+    // Simulate dispatching a message event.
+    await act(async () => {
+      if (messageHandler) {
+        await messageHandler({ data: 'extensionsUpdated' })
+      }
+    })
+
+    // Wait for the state update after handling the message.
+    await waitFor(() => result.current.has('updatedExt'))
+    expect(result.current.has('updatedExt')).toBe(true)
+  })
+
+  test('respects networkType parameter for web wallets', async () => {
+    // For this test, pass networkType as 'testnet' to match our dummy webList.
+    ;(PostMessageTransport.getAvailableExtensions as any).mockResolvedValueOnce([])
+
+    const { result } = renderHook(() => useWallets(NetworkType.GHOSTNET))
+
+    await waitFor(() => {
+      const walletMap = result.current
+      const webWallet = walletMap.get('webWallet')
+      return Boolean(webWallet && webWallet.links[0] === 'http://web.testnet')
+    })
+
+    const walletMap = result.current
+    const webWallet = walletMap.get('webWallet')
+    expect(webWallet).toBeDefined()
+    expect(webWallet!.links[0]).toBe('http://web.testnet')
+  })
+
+  test('removes event listener on unmount', async () => {
+    ;(PostMessageTransport.getAvailableExtensions as any).mockResolvedValueOnce([])
+
+    const { unmount, result } = renderHook(() => useWallets())
+    await waitFor(() => result.current instanceof Map)
+
+    unmount()
+    expect(mockRemoveEventListener).toHaveBeenCalledWith('message', expect.any(Function))
+  })
+
+  test('passes featuredWallets parameter to arrangeTopWallets', async () => {
+    // This test checks that the featuredWallets parameter is passed along.
+    const featuredWallets = ['custom1', 'custom2']
+    ;(PostMessageTransport.getAvailableExtensions as any).mockResolvedValueOnce([])
+
+    renderHook(() => useWallets(undefined, featuredWallets))
+    // Wait for the effect to run.
+    await waitFor(() => {
+      const { arrangeTopWallets } = require('../../../utils/wallets')
+      return arrangeTopWallets.mock.calls.length > 0
+    })
+
+    const { arrangeTopWallets } = require('../../../utils/wallets')
+    expect(arrangeTopWallets).toHaveBeenCalledWith(expect.any(Array), featuredWallets)
+  })
+})
diff --git a/packages/beacon-ui/src/ui/alert/hooks/useWallets.tsx b/packages/beacon-ui/src/ui/alert/hooks/useWallets.tsx
index 345b2302f..c7248c511 100644
--- a/packages/beacon-ui/src/ui/alert/hooks/useWallets.tsx
+++ b/packages/beacon-ui/src/ui/alert/hooks/useWallets.tsx
@@ -1,6 +1,6 @@
 import { useEffect, useMemo, useState } from 'react'
 import { PostMessageTransport } from '@airgap/beacon-transport-postmessage'
-import { arrangeTopWallets, mergeWallets, parseWallets } from 'src/utils/wallets'
+import { arrangeTopWallets, mergeWallets, parseWallets } from '../../../utils/wallets'
 import { Extension, NetworkType } from '@airgap/beacon-types'
 import { desktopList, extensionList, iOSList, webList } from '../wallet-lists'
 import { windowRef } from '@airgap/beacon-core'