diff --git a/x/distribution/types/fee_pool.go b/x/distribution/types/fee_pool.go
index 894bff19196c..83a83b4ad813 100644
--- a/x/distribution/types/fee_pool.go
+++ b/x/distribution/types/fee_pool.go
@@ -20,8 +20,10 @@ func (f FeePool) ValidateGenesis() error {
 		return fmt.Errorf("negative DecimalPool in distribution fee pool, is %v", f.DecimalPool)
 	}
 
-	if f.CommunityPool.IsAnyNegative() { // TODO(@julienrbrt) in v0.53, panic if the community pool is set
-		return fmt.Errorf("negative CommunityPool in distribution fee pool, is %v", f.CommunityPool)
+	// Negative values in CommunityPool represent an invalid state that should never occur
+	// We panic instead of returning an error to prevent the chain from starting with an invalid state
+	if f.CommunityPool.IsAnyNegative() {
+		panic(fmt.Sprintf("negative CommunityPool in distribution fee pool, is %v", f.CommunityPool))
 	}
 
 	return nil
diff --git a/x/distribution/types/fee_pool_test.go b/x/distribution/types/fee_pool_test.go
index 86d3c93f6e64..25c5b76bb077 100644
--- a/x/distribution/types/fee_pool_test.go
+++ b/x/distribution/types/fee_pool_test.go
@@ -12,12 +12,101 @@ import (
 )
 
 func TestValidateGenesis(t *testing.T) {
-	fp := types.InitialFeePool()
-	require.Nil(t, fp.ValidateGenesis())
+	testCases := []struct {
+		name        string
+		feePool     types.FeePool
+		shouldPanic bool
+		expectError bool
+	}{
+		{
+			name:        "valid fee pool",
+			feePool:     types.InitialFeePool(),
+			shouldPanic: false,
+			expectError: false,
+		},
+		{
+			name: "negative decimal pool",
+			feePool: types.FeePool{
+				DecimalPool:   sdk.DecCoins{{Denom: "stake", Amount: math.LegacyNewDec(-1)}},
+				CommunityPool: sdk.DecCoins{},
+			},
+			shouldPanic: false,
+			expectError: true,
+		},
+		{
+			name: "negative community pool",
+			feePool: types.FeePool{
+				DecimalPool:   sdk.DecCoins{},
+				CommunityPool: sdk.DecCoins{{Denom: "stake", Amount: math.LegacyNewDec(-1)}},
+			},
+			shouldPanic: true,
+			expectError: false,
+		},
+		{
+			name: "multiple coins in community pool with one negative value",
+			feePool: types.FeePool{
+				DecimalPool: sdk.DecCoins{},
+				CommunityPool: sdk.DecCoins{
+					{Denom: "stake", Amount: math.LegacyNewDec(1)},
+					{Denom: "atom", Amount: math.LegacyNewDec(-2)},
+				},
+			},
+			shouldPanic: true,
+			expectError: false,
+		},
+		{
+			name: "multiple coins in community pool with all positive values",
+			feePool: types.FeePool{
+				DecimalPool: sdk.DecCoins{},
+				CommunityPool: sdk.DecCoins{
+					{Denom: "stake", Amount: math.LegacyNewDec(1)},
+					{Denom: "atom", Amount: math.LegacyNewDec(2)},
+				},
+			},
+			shouldPanic: false,
+			expectError: false,
+		},
+		{
+			name: "nil decimal pool",
+			feePool: types.FeePool{
+				CommunityPool: sdk.DecCoins{},
+			},
+			shouldPanic: false,
+			expectError: false,
+		},
+		{
+			name: "nil community pool",
+			feePool: types.FeePool{
+				DecimalPool: sdk.DecCoins{},
+			},
+			shouldPanic: false,
+			expectError: false,
+		},
+		{
+			name: "zero value community pool",
+			feePool: types.FeePool{
+				DecimalPool:   sdk.DecCoins{},
+				CommunityPool: sdk.DecCoins{{Denom: "stake", Amount: math.LegacyNewDec(0)}},
+			},
+			shouldPanic: false,
+			expectError: false,
+		},
+	}
 
-	fp2 := types.FeePool{CommunityPool: sdk.DecCoins{{Denom: "stake", Amount: math.LegacyNewDec(-1)}}}
-	require.NotNil(t, fp2.ValidateGenesis())
-
-	fp3 := types.FeePool{DecimalPool: sdk.DecCoins{{Denom: "stake", Amount: math.LegacyNewDec(-1)}}}
-	require.NotNil(t, fp3.ValidateGenesis())
+	for _, tc := range testCases {
+		t.Run(tc.name, func(t *testing.T) {
+			if tc.shouldPanic {
+				require.Panics(t, func() {
+					tc.feePool.ValidateGenesis()
+				}, "ValidateGenesis should panic for test case: %s", tc.name)
+			} else {
+				err := tc.feePool.ValidateGenesis()
+				if tc.expectError {
+					require.Error(t, err, "ValidateGenesis should return error for test case: %s", tc.name)
+				} else {
+					require.NoError(t, err, "ValidateGenesis should not return error for valid FeePool in test case: %s", tc.name)
+				}
+			}
+		})
+	}
 }