diff --git a/CHANGELOG.md b/CHANGELOG.md
index 8c76daa53..ea22fb466 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -44,6 +44,7 @@ at anytime.
   * Add `peer_port` to settings configurable using `settings_set`
   * Added an option to disable max key fee check.
   * Add `wallet_unlock`, a command available during startup to unlock an encrypted wallet
+  * Added a new startup stage to indicate if the daemon is waiting for the `wallet_unlock` command.
   * Add `--conf` CLI flag to specify an alternate config file
   * Added `blockchain_name` and `lbryum_servers` to the adjustable settings
 
diff --git a/lbrynet/core/Wallet.py b/lbrynet/core/Wallet.py
index 501c0d959..06156091c 100644
--- a/lbrynet/core/Wallet.py
+++ b/lbrynet/core/Wallet.py
@@ -1193,6 +1193,9 @@ class LBRYumWallet(Wallet):
         self.blocks_behind = 0
         self.catchup_progress = 0
 
+        # fired when the wallet actually unlocks (wallet_unlocked_d can be called multiple times)
+        self.wallet_unlock_success = defer.Deferred()
+
     def _is_first_run(self):
         return (not self.printed_retrieving_headers and
                 self.network.blockchain.retrieving_headers)
@@ -1203,12 +1206,33 @@ class LBRYumWallet(Wallet):
 
         return self._cmd_runner
 
+    def check_locked(self):
+        if not self.wallet.use_encryption:
+            log.info("Wallet is not encrypted")
+            self.wallet_unlock_success.callback(True)
+        elif not self._cmd_runner:
+            raise Exception("Command runner hasn't been initialized yet")
+        elif self._cmd_runner.locked:
+            log.info("Waiting for wallet password")
+            self.wallet_unlocked_d.addCallback(self.unlock)
+        return self.wallet_unlock_success
+
+    def unlock(self, password):
+        if self._cmd_runner and self._cmd_runner.locked:
+            try:
+                self._cmd_runner.unlock_wallet(password)
+                self.wallet_unlock_success.callback(True)
+                log.info("Unlocked the wallet!")
+            except InvalidPassword:
+                log.warning("Incorrect password, try again")
+                self.wallet_unlocked_d = defer.Deferred()
+                self.wallet_unlocked_d.addCallback(self.unlock)
+                return defer.succeed(False)
+        return defer.succeed(True)
+
     def _start(self):
         network_start_d = defer.Deferred()
 
-        # fired when the wallet actually unlocks (wallet_unlocked_d can be called multiple times)
-        wallet_unlock_success = defer.Deferred()
-
         def setup_network():
             self.network = Network(self.config)
             log.info("Loading the wallet")
@@ -1227,30 +1251,6 @@ class LBRYumWallet(Wallet):
             else:
                 network_start_d.errback(ValueError("Failed to connect to network."))
 
-        def unlock(password):
-            if self._cmd_runner and self._cmd_runner.locked:
-                try:
-                    self._cmd_runner.unlock_wallet(password)
-                    wallet_unlock_success.callback(True)
-                    log.info("Unlocked the wallet!")
-                except InvalidPassword:
-                    log.warning("Incorrect password, try again")
-                    self.wallet_unlocked_d = defer.Deferred()
-                    self.wallet_unlocked_d.addCallback(unlock)
-                    return defer.succeed(False)
-            return defer.succeed(True)
-
-        def check_locked():
-            if not self.wallet.use_encryption:
-                log.info("Wallet is not encrypted")
-                wallet_unlock_success.callback(True)
-            elif not self._cmd_runner:
-                raise Exception("Command runner hasn't been initialized yet")
-            elif self._cmd_runner.locked:
-                log.info("Waiting for wallet password")
-                self.wallet_unlocked_d.addCallback(unlock)
-            return wallet_unlock_success
-
         self._start_check = task.LoopingCall(check_started)
 
         d = setup_network()
@@ -1263,7 +1263,6 @@ class LBRYumWallet(Wallet):
         d.addCallback(lambda _: log.info("Synchronized wallet"))
         d.addCallback(lambda _: self.get_cmd_runner())
         d.addCallbacks(lambda _: log.info("Set up lbryum command runner"))
-        d.addCallbacks(lambda _: check_locked())
         return d
 
     def _stop(self):
diff --git a/lbrynet/daemon/Daemon.py b/lbrynet/daemon/Daemon.py
index da2439a41..c9c4528fe 100644
--- a/lbrynet/daemon/Daemon.py
+++ b/lbrynet/daemon/Daemon.py
@@ -60,6 +60,7 @@ LOADING_FILE_MANAGER_CODE = 'loading_file_manager'
 LOADING_SERVER_CODE = 'loading_server'
 STARTED_CODE = 'started'
 WAITING_FOR_FIRST_RUN_CREDITS = 'waiting_for_credits'
+WAITING_FOR_UNLOCK = 'waiting_for_wallet_unlock'
 STARTUP_STAGES = [
     (INITIALIZING_CODE, 'Initializing'),
     (LOADING_DB_CODE, 'Loading databases'),
@@ -68,6 +69,7 @@ STARTUP_STAGES = [
     (LOADING_SERVER_CODE, 'Starting lbrynet'),
     (STARTED_CODE, 'Started lbrynet'),
     (WAITING_FOR_FIRST_RUN_CREDITS, 'Waiting for first run credits'),
+    (WAITING_FOR_UNLOCK, 'Waiting for user to unlock the wallet using the wallet_unlock command')
 ]
 
 # TODO: make this consistent with the stages in Downloader.py
@@ -248,6 +250,7 @@ class Daemon(AuthJSONRPCServer):
         yield threads.deferToThread(self._setup_data_directory)
         yield self._check_db_migration()
         yield self._get_session()
+        yield self._check_wallet_locked()
         yield self._get_analytics()
         yield add_lbry_file_to_sd_identifier(self.sd_identifier)
         yield self._setup_stream_identifier()
@@ -588,6 +591,14 @@ class Daemon(AuthJSONRPCServer):
         d.addCallback(lambda _: self.session.setup())
         return d
 
+    @defer.inlineCallbacks
+    def _check_wallet_locked(self):
+        wallet = self.session.wallet
+        if wallet.wallet.use_encryption:
+            self.startup_status = STARTUP_STAGES[7]
+
+        yield wallet.check_locked()
+
     def _setup_stream_identifier(self):
         file_saver_factory = EncryptedFileSaverFactory(
             self.session.peer_finder,