diff --git a/ledger/babbage/rules.go b/ledger/babbage/rules.go
index f013f9f7..0ec29b5c 100644
--- a/ledger/babbage/rules.go
+++ b/ledger/babbage/rules.go
@@ -109,13 +109,15 @@ func UtxoValidateCollateralContainsNonAda(tx common.Transaction, slot uint64, ls
 	}
 	badOutputs := []common.TransactionOutput{}
 	var totalCollateral uint64
+	totalAssets := common.NewMultiAsset[common.MultiAssetTypeOutput](nil)
 	for _, collateralInput := range tx.Collateral() {
 		utxo, err := ls.UtxoById(collateralInput)
 		if err != nil {
 			return err
 		}
 		totalCollateral += utxo.Output.Amount()
-		if utxo.Output.Assets() == nil {
+		totalAssets.Add(utxo.Output.Assets())
+		if utxo.Output.Assets() == nil || len(utxo.Output.Assets().Policies()) == 0 {
 			continue
 		}
 		badOutputs = append(badOutputs, utxo.Output)
@@ -123,6 +125,13 @@ func UtxoValidateCollateralContainsNonAda(tx common.Transaction, slot uint64, ls
 	if len(badOutputs) == 0 {
 		return nil
 	}
+	// Check if all collateral assets are accounted for in the collateral return
+	collReturn := tx.CollateralReturn()
+	if collReturn != nil {
+		if collReturn.Assets().Compare(&totalAssets) {
+			return nil
+		}
+	}
 	return alonzo.CollateralContainsNonAdaError{
 		Provided: totalCollateral,
 	}
diff --git a/ledger/babbage/rules_test.go b/ledger/babbage/rules_test.go
index b864fc08..0ca4fb55 100644
--- a/ledger/babbage/rules_test.go
+++ b/ledger/babbage/rules_test.go
@@ -1084,7 +1084,9 @@ func TestUtxoValidateCollateralContainsNonAda(t *testing.T) {
 	testInputTxId := "d228b482a1aae768e4a796380f49e021d9c21f70d3c12cb186b188dedfc0ee22"
 	var testCollateralAmount uint64 = 100000
 	testTx := &babbage.BabbageTransaction{
-		Body: babbage.BabbageTransactionBody{},
+		Body: babbage.BabbageTransactionBody{
+			TxTotalCollateral: testCollateralAmount,
+		},
 		WitnessSet: babbage.BabbageTransactionWitnessSet{
 			AlonzoTransactionWitnessSet: alonzo.AlonzoTransactionWitnessSet{
 				WsRedeemers: []alonzo.AlonzoRedeemer{
@@ -1095,7 +1097,11 @@ func TestUtxoValidateCollateralContainsNonAda(t *testing.T) {
 		},
 	}
 	tmpMultiAsset := common.NewMultiAsset[common.MultiAssetTypeOutput](
-		map[common.Blake2b224]map[cbor.ByteString]uint64{},
+		map[common.Blake2b224]map[cbor.ByteString]uint64{
+			common.Blake2b224Hash([]byte("abcd")): map[cbor.ByteString]uint64{
+				cbor.NewByteString([]byte("efgh")): 123,
+			},
+		},
 	)
 	testLedgerState := test.MockLedgerState{
 		MockUtxos: []common.Utxo{
@@ -1170,6 +1176,34 @@ func TestUtxoValidateCollateralContainsNonAda(t *testing.T) {
 			}
 		},
 	)
+	// Coin and assets with return
+	t.Run(
+		"coin and assets with return",
+		func(t *testing.T) {
+			testTx.Body.TxCollateral = []shelley.ShelleyTransactionInput{
+				shelley.NewShelleyTransactionInput(testInputTxId, 0),
+				shelley.NewShelleyTransactionInput(testInputTxId, 1),
+			}
+			testTx.Body.TxCollateralReturn = &babbage.BabbageTransactionOutput{
+				OutputAmount: mary.MaryTransactionOutputValue{
+					Amount: testCollateralAmount,
+					Assets: &tmpMultiAsset,
+				},
+			}
+			err := babbage.UtxoValidateCollateralContainsNonAda(
+				testTx,
+				testSlot,
+				testLedgerState,
+				testProtocolParams,
+			)
+			if err != nil {
+				t.Errorf(
+					"UtxoValidateCollateralContainsNonAda should succeed when collateral with only coin is provided\n  got error: %v",
+					err,
+				)
+			}
+		},
+	)
 }
 
 func TestUtxoValidateNoCollateralInputs(t *testing.T) {
diff --git a/ledger/common/common.go b/ledger/common/common.go
index 9728ee1f..69112cde 100644
--- a/ledger/common/common.go
+++ b/ledger/common/common.go
@@ -141,6 +141,9 @@ type MultiAsset[T MultiAssetTypeOutput | MultiAssetTypeMint] struct {
 func NewMultiAsset[T MultiAssetTypeOutput | MultiAssetTypeMint](
 	data map[Blake2b224]map[cbor.ByteString]T,
 ) MultiAsset[T] {
+	if data == nil {
+		data = make(map[Blake2b224]map[cbor.ByteString]T)
+	}
 	return MultiAsset[T]{data: data}
 }
 
@@ -210,6 +213,41 @@ func (m *MultiAsset[T]) Asset(policyId Blake2b224, assetName []byte) T {
 	return policy[cbor.NewByteString(assetName)]
 }
 
+func (m *MultiAsset[T]) Add(assets *MultiAsset[T]) {
+	if assets == nil {
+		return
+	}
+	for policy, assets := range assets.data {
+		for asset, amount := range assets {
+			newAmount := m.Asset(policy, asset.Bytes()) + amount
+			if _, ok := m.data[policy]; !ok {
+				m.data[policy] = make(map[cbor.ByteString]T)
+			}
+			m.data[policy][asset] = newAmount
+		}
+	}
+}
+
+func (m *MultiAsset[T]) Compare(assets *MultiAsset[T]) bool {
+	if assets == nil {
+		return false
+	}
+	if len(assets.data) != len(m.data) {
+		return false
+	}
+	for policy, assets := range assets.data {
+		if len(assets) != len(m.data[policy]) {
+			return false
+		}
+		for asset, amount := range assets {
+			if amount != m.Asset(policy, asset.Bytes()) {
+				return false
+			}
+		}
+	}
+	return true
+}
+
 type AssetFingerprint struct {
 	policyId  []byte
 	assetName []byte
diff --git a/ledger/conway/rules.go b/ledger/conway/rules.go
index 5fd70413..97d5c250 100644
--- a/ledger/conway/rules.go
+++ b/ledger/conway/rules.go
@@ -129,13 +129,15 @@ func UtxoValidateCollateralContainsNonAda(tx common.Transaction, slot uint64, ls
 	}
 	badOutputs := []common.TransactionOutput{}
 	var totalCollateral uint64
+	totalAssets := common.NewMultiAsset[common.MultiAssetTypeOutput](nil)
 	for _, collateralInput := range tx.Collateral() {
 		utxo, err := ls.UtxoById(collateralInput)
 		if err != nil {
 			return err
 		}
 		totalCollateral += utxo.Output.Amount()
-		if utxo.Output.Assets() == nil {
+		totalAssets.Add(utxo.Output.Assets())
+		if utxo.Output.Assets() == nil || len(utxo.Output.Assets().Policies()) == 0 {
 			continue
 		}
 		badOutputs = append(badOutputs, utxo.Output)
@@ -143,6 +145,13 @@ func UtxoValidateCollateralContainsNonAda(tx common.Transaction, slot uint64, ls
 	if len(badOutputs) == 0 {
 		return nil
 	}
+	// Check if all collateral assets are accounted for in the collateral return
+	collReturn := tx.CollateralReturn()
+	if collReturn != nil {
+		if collReturn.Assets().Compare(&totalAssets) {
+			return nil
+		}
+	}
 	return alonzo.CollateralContainsNonAdaError{
 		Provided: totalCollateral,
 	}
diff --git a/ledger/conway/rules_test.go b/ledger/conway/rules_test.go
index 5281f097..ea9d48de 100644
--- a/ledger/conway/rules_test.go
+++ b/ledger/conway/rules_test.go
@@ -1095,7 +1095,11 @@ func TestUtxoValidateCollateralContainsNonAda(t *testing.T) {
 	testInputTxId := "d228b482a1aae768e4a796380f49e021d9c21f70d3c12cb186b188dedfc0ee22"
 	var testCollateralAmount uint64 = 100000
 	testTx := &conway.ConwayTransaction{
-		Body: conway.ConwayTransactionBody{},
+		Body: conway.ConwayTransactionBody{
+			BabbageTransactionBody: babbage.BabbageTransactionBody{
+				TxTotalCollateral: testCollateralAmount,
+			},
+		},
 		WitnessSet: conway.ConwayTransactionWitnessSet{
 			WsRedeemers: conway.ConwayRedeemers{
 				Redeemers: map[conway.ConwayRedeemerKey]conway.ConwayRedeemerValue{
@@ -1106,7 +1110,11 @@ func TestUtxoValidateCollateralContainsNonAda(t *testing.T) {
 		},
 	}
 	tmpMultiAsset := common.NewMultiAsset[common.MultiAssetTypeOutput](
-		map[common.Blake2b224]map[cbor.ByteString]uint64{},
+		map[common.Blake2b224]map[cbor.ByteString]uint64{
+			common.Blake2b224Hash([]byte("abcd")): map[cbor.ByteString]uint64{
+				cbor.NewByteString([]byte("efgh")): 123,
+			},
+		},
 	)
 	testLedgerState := test.MockLedgerState{
 		MockUtxos: []common.Utxo{
@@ -1181,6 +1189,34 @@ func TestUtxoValidateCollateralContainsNonAda(t *testing.T) {
 			}
 		},
 	)
+	// Coin and assets with return
+	t.Run(
+		"coin and assets with return",
+		func(t *testing.T) {
+			testTx.Body.TxCollateral = []shelley.ShelleyTransactionInput{
+				shelley.NewShelleyTransactionInput(testInputTxId, 0),
+				shelley.NewShelleyTransactionInput(testInputTxId, 1),
+			}
+			testTx.Body.TxCollateralReturn = &babbage.BabbageTransactionOutput{
+				OutputAmount: mary.MaryTransactionOutputValue{
+					Amount: testCollateralAmount,
+					Assets: &tmpMultiAsset,
+				},
+			}
+			err := conway.UtxoValidateCollateralContainsNonAda(
+				testTx,
+				testSlot,
+				testLedgerState,
+				testProtocolParams,
+			)
+			if err != nil {
+				t.Errorf(
+					"UtxoValidateCollateralContainsNonAda should succeed when collateral with only coin is provided\n  got error: %v",
+					err,
+				)
+			}
+		},
+	)
 }
 
 func TestUtxoValidateNoCollateralInputs(t *testing.T) {