diff --git a/packages/assets-controller/CHANGELOG.md b/packages/assets-controller/CHANGELOG.md
index bc0966972b5..2995daa7616 100644
--- a/packages/assets-controller/CHANGELOG.md
+++ b/packages/assets-controller/CHANGELOG.md
@@ -24,6 +24,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 ### Fixed
 
+- Convert WebSocket balance updates in `BackendWebsocketDataSource` from raw smallest-units to human-readable amounts using asset decimals (same behavior as RPC/Accounts API), so `assetsBalance` remains consistent across data sources ([#8032](https://github.com/MetaMask/core/pull/8032))
 - Include all assets from balance and each account's custom assets from state in `detectedAssets`, so prices and metadata are fetched for existing assets and custom tokens (previously only assets without metadata were included, so existing assets did not get prices) ([#8021](https://github.com/MetaMask/core/pull/8021))
 - Request `includeAggregators: true` when fetching token metadata from the v3 assets API so aggregator data is returned and stored in `assetsInfo` ([#8021](https://github.com/MetaMask/core/pull/8021))
 
diff --git a/packages/assets-controller/src/data-sources/BackendWebsocketDataSource.test.ts b/packages/assets-controller/src/data-sources/BackendWebsocketDataSource.test.ts
index 02684639727..aaad33d43a0 100644
--- a/packages/assets-controller/src/data-sources/BackendWebsocketDataSource.test.ts
+++ b/packages/assets-controller/src/data-sources/BackendWebsocketDataSource.test.ts
@@ -593,11 +593,12 @@ describe('BackendWebsocketDataSource', () => {
     notificationCallback(notification);
     await new Promise(process.nextTick);
 
+    // Raw 10e18 wei (0x8ac7230489e80000) with 18 decimals → human-readable "10"
     expect(assetsUpdateHandler).toHaveBeenCalledWith(
       expect.objectContaining({
         assetsBalance: expect.objectContaining({
           'mock-account-id': expect.objectContaining({
-            'eip155:8453/slip44:60': { amount: '10000000000000000000' },
+            'eip155:8453/slip44:60': { amount: '10' },
           }),
         }),
         assetsInfo: expect.objectContaining({
@@ -659,12 +660,13 @@ describe('BackendWebsocketDataSource', () => {
     notificationCallback(notification);
     await new Promise(process.nextTick);
 
+    // Raw 1000000 (1 USDC) with 6 decimals → human-readable "1"
     expect(assetsUpdateHandler).toHaveBeenCalledWith(
       expect.objectContaining({
         assetsBalance: expect.objectContaining({
           'mock-account-id': expect.objectContaining({
             'eip155:1/erc20:0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48': {
-              amount: '1000000',
+              amount: '1',
             },
           }),
         }),
@@ -682,6 +684,122 @@ describe('BackendWebsocketDataSource', () => {
     controller.destroy();
   });
 
+  it('converts raw WebSocket balance (hex) to human-readable using asset decimals', async () => {
+    const { controller, wsSubscribeMock, assetsUpdateHandler } =
+      setupController({
+        initialActiveChains: [CHAIN_MAINNET],
+        connectionState: WebSocketState.CONNECTED,
+      });
+
+    let notificationCallback: (
+      notification: ServerNotificationMessage,
+    ) => void = () => undefined;
+
+    wsSubscribeMock.mockImplementation(({ callback }) => {
+      notificationCallback = callback;
+      return Promise.resolve(createMockWsSubscription());
+    });
+
+    await controller.subscribe({
+      subscriptionId: 'sub-1',
+      request: createDataRequest(),
+      isUpdate: false,
+      onAssetsUpdate: assetsUpdateHandler,
+    });
+
+    // 0x26f0e5 = 2552037 raw; USDC 6 decimals → 2.552037
+    const notification = createMockNotification({
+      channel: `account-activity.v1.eip155:0:${MOCK_ADDRESS.toLowerCase()}`,
+      data: {
+        address: MOCK_ADDRESS,
+        tx: { chain: CHAIN_MAINNET },
+        updates: [
+          {
+            asset: {
+              type: 'eip155:1/erc20:0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48',
+              unit: 'USDC',
+              decimals: 6,
+            },
+            postBalance: {
+              amount: '0x26f0e5',
+            },
+          },
+        ],
+      },
+    });
+
+    notificationCallback(notification);
+    await new Promise(process.nextTick);
+
+    // assetId key is as in notification (mixed case)
+    expect(assetsUpdateHandler).toHaveBeenCalledWith(
+      expect.objectContaining({
+        assetsBalance: expect.objectContaining({
+          'mock-account-id': expect.objectContaining({
+            'eip155:1/erc20:0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48': {
+              amount: '2.552037',
+            },
+          }),
+        }),
+      }),
+    );
+
+    controller.destroy();
+  });
+
+  it('skips balance update when asset.decimals is missing', async () => {
+    const { controller, wsSubscribeMock, assetsUpdateHandler } =
+      setupController({
+        initialActiveChains: [CHAIN_MAINNET],
+        connectionState: WebSocketState.CONNECTED,
+      });
+
+    let notificationCallback: (
+      notification: ServerNotificationMessage,
+    ) => void = () => undefined;
+
+    wsSubscribeMock.mockImplementation(({ callback }) => {
+      notificationCallback = callback;
+      return Promise.resolve(createMockWsSubscription());
+    });
+
+    await controller.subscribe({
+      subscriptionId: 'sub-1',
+      request: createDataRequest(),
+      isUpdate: false,
+      onAssetsUpdate: assetsUpdateHandler,
+    });
+
+    // No decimals on asset → update is skipped (we assume decimals are always present)
+    const notification = createMockNotification({
+      channel: `account-activity.v1.eip155:0:${MOCK_ADDRESS.toLowerCase()}`,
+      data: {
+        address: MOCK_ADDRESS,
+        tx: { chain: CHAIN_MAINNET },
+        updates: [
+          {
+            asset: {
+              type: 'eip155:1/erc20:0x0000000000000000000000000000000000000001',
+              unit: 'UNKNOWN',
+              decimals: undefined,
+            },
+            postBalance: {
+              amount: '1000000000000000000',
+            },
+          },
+        ],
+      },
+    });
+
+    notificationCallback(notification);
+    await new Promise(process.nextTick);
+
+    // No valid updates → response has only updateMode, no assetsBalance
+    expect(assetsUpdateHandler).toHaveBeenCalledWith({ updateMode: 'merge' });
+
+    controller.destroy();
+  });
+
   it('ignores notification with missing data', async () => {
     const { controller, wsSubscribeMock, assetsUpdateHandler } =
       setupController({
diff --git a/packages/assets-controller/src/data-sources/BackendWebsocketDataSource.ts b/packages/assets-controller/src/data-sources/BackendWebsocketDataSource.ts
index 9d6c617109d..0cad9d7c95b 100644
--- a/packages/assets-controller/src/data-sources/BackendWebsocketDataSource.ts
+++ b/packages/assets-controller/src/data-sources/BackendWebsocketDataSource.ts
@@ -13,6 +13,7 @@ import {
   KnownCaipNamespace,
   toCaipChainId,
 } from '@metamask/utils';
+import BigNumberJS from 'bignumber.js';
 
 import { AbstractDataSource } from './AbstractDataSource';
 import type {
@@ -607,13 +608,23 @@ export class BackendWebsocketDataSource extends AbstractDataSource<
       const isNative = asset.type.includes('/slip44:');
       const tokenType = isNative ? 'native' : 'erc20';
 
-      // Parse balance amount (already in hex format like "0xc350")
-      const balanceAmount = postBalance.amount.startsWith('0x')
+      // We assume decimals are always present; skip malformed updates
+      if (asset.decimals === undefined) {
+        continue;
+      }
+
+      // Parse raw balance (hex like "0x26f0e5" or decimal string)
+      const rawBalanceStr = postBalance.amount.startsWith('0x')
         ? BigInt(postBalance.amount).toString()
         : postBalance.amount;
 
+      // Convert to human-readable using asset decimals (match RpcDataSource / pipeline format)
+      const humanReadableAmount = new BigNumberJS(rawBalanceStr)
+        .dividedBy(new BigNumberJS(10).pow(asset.decimals))
+        .toString();
+
       assetsBalance[accountId][assetId] = {
-        amount: balanceAmount,
+        amount: humanReadableAmount,
       };
 
       assetsMetadata[assetId] = {