diff --git a/Dockerfile-versioned-source b/Dockerfile-versioned-source
index f6b90d5126..67c4ac4273 100644
--- a/Dockerfile-versioned-source
+++ b/Dockerfile-versioned-source
@@ -17,7 +17,7 @@ WORKDIR /go/delivery/zeta-node
 RUN mkdir -p  $GOPATH/bin/old
 RUN mkdir -p  $GOPATH/bin/new
 
-ENV NEW_VERSION=v12.0.0
+ENV NEW_VERSION=v12.1.0
 
 # Build new release from the current source
 COPY go.mod /go/delivery/zeta-node/
diff --git a/Makefile b/Makefile
index 34862f40e3..2fe0da31cd 100644
--- a/Makefile
+++ b/Makefile
@@ -240,7 +240,7 @@ stateful-upgrade:
 
 stateful-upgrade-source:
 	@echo "--> Starting stateful smoketest"
-	$(DOCKER) build --build-arg old_version=v11.0.0-patch-core-params -t zetanode -f ./Dockerfile-versioned-source .
+	$(DOCKER) build --build-arg old_version=v12.0.0 -t zetanode -f ./Dockerfile-versioned-source .
 	$(DOCKER) build -t orchestrator -f contrib/localnet/orchestrator/Dockerfile-upgrade.fastbuild .
 	cd contrib/localnet/ && $(DOCKER) compose -f docker-compose-stateful.yml up -d
 
diff --git a/app/setup_handlers.go b/app/setup_handlers.go
index 533679f243..8619fa046f 100644
--- a/app/setup_handlers.go
+++ b/app/setup_handlers.go
@@ -5,11 +5,9 @@ import (
 	sdk "github.com/cosmos/cosmos-sdk/types"
 	"github.com/cosmos/cosmos-sdk/types/module"
 	"github.com/cosmos/cosmos-sdk/x/upgrade/types"
-	crosschaintypes "github.com/zeta-chain/zetacore/x/crosschain/types"
-	observertypes "github.com/zeta-chain/zetacore/x/observer/types"
 )
 
-const releaseVersion = "v12.0.0"
+const releaseVersion = "v12.1.0"
 
 func SetupHandlers(app *App) {
 	app.UpgradeKeeper.SetUpgradeHandler(releaseVersion, func(ctx sdk.Context, plan types.Plan, vm module.VersionMap) (module.VersionMap, error) {
@@ -18,8 +16,6 @@ func SetupHandlers(app *App) {
 		for m, mb := range app.mm.Modules {
 			vm[m] = mb.ConsensusVersion()
 		}
-		vm[crosschaintypes.ModuleName] = 3
-		vm[observertypes.ModuleName] = 4
 		return app.mm.RunMigrations(ctx, app.configurator, vm)
 	})
 
diff --git a/changelog.md b/changelog.md
index c6396ae86f..037accc506 100644
--- a/changelog.md
+++ b/changelog.md
@@ -2,6 +2,9 @@
 
 ## Unreleased
 
+
+## Version: v12.1.0
+
 ### Tests
 
 * [1577](https://github.com/zeta-chain/node/pull/1577) - add chain header tests in E2E tests and fix admin tests
@@ -21,6 +24,8 @@
 ### Chores
 
 * [1585](https://github.com/zeta-chain/node/pull/1585) - Updated release instructions
+* [1615](https://github.com/zeta-chain/node/pull/1615) - Add upgrade handler for version v12.1.0
+
 
 ## Version: v12.0.0