diff --git a/.github/workflows/casper-node.yml b/.github/workflows/casper-node.yml
index 282ffc6ce4..87015d34ab 100644
--- a/.github/workflows/casper-node.yml
+++ b/.github/workflows/casper-node.yml
@@ -46,7 +46,7 @@ jobs:
             ~/.rustup/update-hashes
             ~/.rustup/settings.toml
             ~/.cargo/bin/cargo-audit
-          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'smart_contracts/rust-toolchain', 'Makefile') }}
+          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'Makefile') }}
           restore-keys: |
             setup-tools-${{ runner.os }}-
 
@@ -97,7 +97,7 @@ jobs:
             ~/.rustup/update-hashes
             ~/.rustup/settings.toml
             ~/.cargo/bin/cargo-audit
-          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'smart_contracts/rust-toolchain', 'Makefile') }}
+          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'Makefile') }}
           restore-keys: |
             setup-tools-${{ runner.os }}-
 
@@ -140,7 +140,7 @@ jobs:
             ~/.rustup/update-hashes
             ~/.rustup/settings.toml
             ~/.cargo/bin/cargo-audit
-          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'smart_contracts/rust-toolchain', 'Makefile') }}
+          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'Makefile') }}
           restore-keys: |
             setup-tools-${{ runner.os }}-
 
@@ -174,7 +174,7 @@ jobs:
             ~/.rustup/update-hashes
             ~/.rustup/settings.toml
             ~/.cargo/bin/cargo-audit
-          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'smart_contracts/rust-toolchain', 'Makefile') }}
+          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'Makefile') }}
           restore-keys: |
             setup-tools-${{ runner.os }}-
 
@@ -219,7 +219,7 @@ jobs:
             ~/.rustup/update-hashes
             ~/.rustup/settings.toml
             ~/.cargo/bin/cargo-audit
-          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'smart_contracts/rust-toolchain', 'Makefile') }}
+          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'Makefile') }}
           restore-keys: |
             setup-tools-${{ runner.os }}-
 
@@ -264,7 +264,7 @@ jobs:
             ~/.rustup/update-hashes
             ~/.rustup/settings.toml
             ~/.cargo/bin/cargo-audit
-          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'smart_contracts/rust-toolchain', 'Makefile') }}
+          key: setup-tools-${{ runner.os }}-${{ hashFiles('rust-toolchain.toml', 'Makefile') }}
           restore-keys: |
             setup-tools-${{ runner.os }}-
 
diff --git a/rust-toolchain.toml b/rust-toolchain.toml
index e9dae42a39..642220914d 100644
--- a/rust-toolchain.toml
+++ b/rust-toolchain.toml
@@ -1,2 +1,2 @@
 [toolchain]
-channel = "1.98.0"
\ No newline at end of file
+channel = "1.98.1"
diff --git a/smart_contracts/contract/CHANGELOG.md b/smart_contracts/contract/CHANGELOG.md
index de93c9d51e..5a6dce5069 100644
--- a/smart_contracts/contract/CHANGELOG.md
+++ b/smart_contracts/contract/CHANGELOG.md
@@ -12,7 +12,7 @@ All notable changes to this project will be documented in this file.  The format
 ## Unreleased
 
 ### Changed
-* Smart-contract Wasm builds in this workspace now target `wasm32v1-none` instead of `wasm32-unknown-unknown`. `smart_contracts/contracts/.cargo/config.toml` sets `target = "wasm32v1-none"` and replaces the old `-C target-feature=-bulk-memory` rustflag with `-C link-arg=--import-undefined`; all other flags were dropped since `wasm32v1-none` enforces the Wasm MVP feature set on its own. The repo-root `rust-toolchain.toml` and `smart_contracts/rust-toolchain` were bumped accordingly, moving this workspace off its previously pinned dated nightly onto the `1.98.0` stable channel.
+* Smart-contract Wasm builds in this workspace now target `wasm32v1-none` instead of `wasm32-unknown-unknown`. `smart_contracts/contracts/.cargo/config.toml` sets `target = "wasm32v1-none"` and replaces the old `-C target-feature=-bulk-memory` rustflag with `-C link-arg=--import-undefined`; all other flags were dropped since `wasm32v1-none` enforces the Wasm MVP feature set on its own. The repo-root `rust-toolchain.toml` was bumped accordingly, moving this workspace off its previously pinned dated nightly onto the `1.98.0` stable channel.
 * `wasm32v1-none` and `-C link-arg=--import-undefined` require a Rust toolchain no older than `nightly-2025-08-03`. This workspace now builds with `1.98.0` stable, which postdates that requirement, but third-party contracts built against this crate's API on their own nightly toolchain must bump to at least `nightly-2025-08-03` (or a later toolchain) to keep building.
 
 ## 5.1.1
diff --git a/smart_contracts/rust-toolchain b/smart_contracts/rust-toolchain
deleted file mode 100644
index 783fda8643..0000000000
--- a/smart_contracts/rust-toolchain
+++ /dev/null
@@ -1 +0,0 @@
-1.98.0