diff --git a/go.mod b/go.mod
index 3b55e726e..de529532f 100644
--- a/go.mod
+++ b/go.mod
@@ -29,7 +29,7 @@ require (
 	github.com/lightninglabs/lightning-node-connect/hashmailrpc v1.0.3
 	github.com/lightninglabs/lndclient v0.19.0-7
 	github.com/lightninglabs/neutrino/cache v1.1.2
-	github.com/lightninglabs/taproot-assets/taprpc v1.0.6
+	github.com/lightninglabs/taproot-assets/taprpc v1.0.7
 	github.com/lightningnetwork/lnd v0.19.0-beta
 	github.com/lightningnetwork/lnd/cert v1.2.2
 	github.com/lightningnetwork/lnd/clock v1.1.1
diff --git a/rpcserver.go b/rpcserver.go
index 5479ff8f7..ef069f3f6 100644
--- a/rpcserver.go
+++ b/rpcserver.go
@@ -8553,8 +8553,10 @@ func (r *rpcServer) getInboundPolicy(ctx context.Context, chanID uint64,
 		return nil, fmt.Errorf("unable to fetch channel: %w", err)
 	}
 
+	// We want the policy that corresponds to the node that is the remote
+	// peer in the channel.
 	policy := edge.Node2Policy
-	if edge.Node2Pub == remotePubStr {
+	if edge.Node1Pub == remotePubStr {
 		policy = edge.Node1Policy
 	}
 
diff --git a/tapchannel/commitment.go b/tapchannel/commitment.go
index 2d1ac4855..294a74417 100644
--- a/tapchannel/commitment.go
+++ b/tapchannel/commitment.go
@@ -969,7 +969,10 @@ func addCommitmentOutputs(chanType channeldb.ChannelType, localChanCfg,
 
 	// We've asserted that we have a non-dust BTC balance if we have an
 	// asset balance before, so we can just check the asset balance here.
-	if ourAssetBalance > 0 || ourBalance > 0 {
+	// In case there is no asset balance, and the BTC value is dust, it will
+	// not be materialized on-chain, and we shouldn't create an allocation
+	// for it.
+	if ourAssetBalance > 0 || ourBalance > localChanCfg.DustLimit {
 		toLocalScript, err := lnwallet.CommitScriptToSelf(
 			chanType, initiator, keys.ToLocalKey,
 			keys.RevocationKey, uint32(localChanCfg.CsvDelay),
@@ -1033,7 +1036,10 @@ func addCommitmentOutputs(chanType channeldb.ChannelType, localChanCfg,
 		addAllocation(allocation)
 	}
 
-	if theirAssetBalance > 0 || theirBalance > 0 {
+	// We only create an allocation if there is going to be an on-chain
+	// output. If this is dust (which is only allowed if there are no assets
+	// on the output), it will not be materialized on-chain.
+	if theirAssetBalance > 0 || theirBalance > localChanCfg.DustLimit {
 		toRemoteScript, _, err := lnwallet.CommitScriptToRemote(
 			chanType, initiator, keys.ToRemoteKey, leaseExpiry,
 			lfn.None[txscript.TapLeaf](),