diff --git a/CHANGELOG.md b/CHANGELOG.md
index a5fbb4ac557..c5456aa69db 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -34,7 +34,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 
 # Changelog
 
-## [v1.0.0-rc2](https://github.com/cosmos/ibc-go/releases/tag/v1.0.0-rc2) - 2021-07-20
+## [v1.0.0-rc4](https://github.com/cosmos/ibc-go/releases/tag/v1.0.0-rc4) - 2021-08-05
 
 ### Bug Fixes
 
diff --git a/go.mod b/go.mod
index ad5a7d1376a..10aca926688 100644
--- a/go.mod
+++ b/go.mod
@@ -7,7 +7,7 @@ replace github.com/gogo/protobuf => github.com/regen-network/protobuf v1.3.3-alp
 require (
 	github.com/armon/go-metrics v0.3.9
 	github.com/confio/ics23/go v0.6.6
-	github.com/cosmos/cosmos-sdk v0.43.0-rc2
+	github.com/cosmos/cosmos-sdk v0.43.0-rc3
 	github.com/gogo/protobuf v1.3.3
 	github.com/golang/protobuf v1.5.2
 	github.com/gorilla/mux v1.8.0
diff --git a/go.sum b/go.sum
index a2d8c2c0e24..2ae5e0c7981 100644
--- a/go.sum
+++ b/go.sum
@@ -164,8 +164,8 @@ github.com/coreos/go-systemd v0.0.0-20190321100706-95778dfbb74e/go.mod h1:F5haX7
 github.com/coreos/go-systemd/v22 v22.3.2/go.mod h1:Y58oyj3AT4RCenI/lSvhwexgC+NSVTIJ3seZv2GcEnc=
 github.com/coreos/pkg v0.0.0-20160727233714-3ac0863d7acf/go.mod h1:E3G3o1h8I7cfcXa63jLwjI0eiQQMgzzUDFVpN/nH/eA=
 github.com/coreos/pkg v0.0.0-20180928190104-399ea9e2e55f/go.mod h1:E3G3o1h8I7cfcXa63jLwjI0eiQQMgzzUDFVpN/nH/eA=
-github.com/cosmos/cosmos-sdk v0.43.0-rc2 h1:9xww4vDnsNyZyF1p9U4zpc8tc5Ctx763WQWLccddP8A=
-github.com/cosmos/cosmos-sdk v0.43.0-rc2/go.mod h1:ctcrTEAhei9s8O3KSNvL0dxe+fVQGp07QyRb/7H9JYE=
+github.com/cosmos/cosmos-sdk v0.43.0-rc3 h1:vON4QgwSWCbDJF2brO/CqIjnMvjwAYXZS9p9on2qWcQ=
+github.com/cosmos/cosmos-sdk v0.43.0-rc3/go.mod h1:ctcrTEAhei9s8O3KSNvL0dxe+fVQGp07QyRb/7H9JYE=
 github.com/cosmos/go-bip39 v0.0.0-20180819234021-555e2067c45d/go.mod h1:tSxLoYXyBmiFeKpvmq4dzayMdCjCnu8uqmCysIGBT2Y=
 github.com/cosmos/go-bip39 v1.0.0 h1:pcomnQdrdH22njcAatO0yWojsUnCO3y2tNoV1cb6hHY=
 github.com/cosmos/go-bip39 v1.0.0/go.mod h1:RNJv0H/pOIVgxw6KS7QeX2a0Uo0aKUlfhZ4xuwvCdJw=
diff --git a/modules/core/02-client/keeper/client_test.go b/modules/core/02-client/keeper/client_test.go
index 17c97a8d26d..0029ae5f235 100644
--- a/modules/core/02-client/keeper/client_test.go
+++ b/modules/core/02-client/keeper/client_test.go
@@ -678,9 +678,8 @@ func (suite *KeeperTestSuite) TestUpdateClientEventEmission() {
 
 	result, err := suite.chainA.SendMsgs(msg)
 	suite.Require().NoError(err)
-	// first event type is "message"
-	updateEvent := result.Events[1]
-
+	// first event type is "message", followed by 2 "tx" events in ante
+	updateEvent := result.Events[3]
 	suite.Require().Equal(clienttypes.EventTypeUpdateClient, updateEvent.Type)
 
 	// use a boolean to ensure the update event contains the header
diff --git a/testing/simapp/app.go b/testing/simapp/app.go
index 817996c4c4c..230ad71ae24 100644
--- a/testing/simapp/app.go
+++ b/testing/simapp/app.go
@@ -13,7 +13,6 @@ import (
 	abci "github.com/tendermint/tendermint/abci/types"
 	"github.com/tendermint/tendermint/libs/log"
 	tmos "github.com/tendermint/tendermint/libs/os"
-	tmproto "github.com/tendermint/tendermint/proto/tendermint/types"
 	dbm "github.com/tendermint/tm-db"
 
 	"github.com/cosmos/cosmos-sdk/baseapp"
@@ -260,6 +259,9 @@ func NewSimApp(
 	// note replicate if you do not need to test core IBC or light clients.
 	scopedIBCMockKeeper := app.CapabilityKeeper.ScopeToModule(ibcmock.ModuleName)
 
+	// seal capability keeper after scoping modules
+	app.CapabilityKeeper.Seal()
+
 	// add keepers
 	app.AccountKeeper = authkeeper.NewAccountKeeper(
 		appCodec, keys[authtypes.StoreKey], app.GetSubspace(authtypes.ModuleName), authtypes.ProtoBaseAccount, maccPerms,
@@ -375,8 +377,9 @@ func NewSimApp(
 	// there is nothing left over in the validator fee pool, so as to keep the
 	// CanWithdrawInvariant invariant.
 	// NOTE: staking module is required if HistoricalEntries param > 0
+	// NOTE: capability module's beginblocker must come before any modules using capabilities (e.g. IBC)
 	app.mm.SetOrderBeginBlockers(
-		upgradetypes.ModuleName, minttypes.ModuleName, distrtypes.ModuleName, slashingtypes.ModuleName,
+		upgradetypes.ModuleName, capabilitytypes.ModuleName, minttypes.ModuleName, distrtypes.ModuleName, slashingtypes.ModuleName,
 		evidencetypes.ModuleName, stakingtypes.ModuleName, ibchost.ModuleName,
 	)
 	app.mm.SetOrderEndBlockers(crisistypes.ModuleName, govtypes.ModuleName, stakingtypes.ModuleName)
@@ -453,16 +456,6 @@ func NewSimApp(
 		if err := app.LoadLatestVersion(); err != nil {
 			tmos.Exit(err.Error())
 		}
-
-		// Initialize and seal the capability keeper so all persistent capabilities
-		// are loaded in-memory and prevent any further modules from creating scoped
-		// sub-keepers.
-		// This must be done during creation of baseapp rather than in InitChain so
-		// that in-memory capabilities get regenerated on app restart.
-		// Note that since this reads from the store, we can only perform it when
-		// `loadLatest` is set to true.
-		ctx := app.BaseApp.NewUncachedContext(true, tmproto.Header{})
-		app.CapabilityKeeper.InitializeAndSeal(ctx)
 	}
 
 	app.ScopedIBCKeeper = scopedIBCKeeper