diff --git a/cryptohome/mount_encrypted/encryption_key.cc b/cryptohome/mount_encrypted/encryption_key.cc
index f442a33..3754a4d 100644
--- a/cryptohome/mount_encrypted/encryption_key.cc
+++ b/cryptohome/mount_encrypted/encryption_key.cc
@@ -269,14 +269,6 @@
     }
 
     if (!system_key_.empty() && loader_->Persist() != RESULT_SUCCESS) {
-      if (USE_TPM2) {
-        // The system_key shouldn't fail to persist in TPM2 case, it would only
-        // happen when we had some TPM errors.
-        LOG(ERROR) << "Failed to persist the system key.";
-        // We shouldn't continue to regenerate the existing encryption key.
-        system_key_status_ = SystemKeyStatus::kUnknown;
-        return RESULT_FAIL_FATAL;
-      }
       system_key_.clear();
     }
   }
diff --git a/cryptohome/mount_encrypted/encryption_key_unittest.cc b/cryptohome/mount_encrypted/encryption_key_unittest.cc
index 90dce57..bed2912 100644
--- a/cryptohome/mount_encrypted/encryption_key_unittest.cc
+++ b/cryptohome/mount_encrypted/encryption_key_unittest.cc
@@ -347,8 +347,10 @@
 TEST_F(EncryptionKeyTest, TpmOwnedNoSpaces) {
   SetOwned();
 
-  ExpectSystemKeyFailed();
-  EXPECT_EQ(SystemKeyStatus::kUnknown, key_->system_key_status());
+  ExpectFreshKey();
+  EXPECT_EQ(EncryptionKeyStatus::kFresh, key_->encryption_key_status());
+  ExpectNeedsFinalization();
+  EXPECT_EQ(SystemKeyStatus::kFinalizationPending, key_->system_key_status());
 }
 
 TEST_F(EncryptionKeyTest, TpmExistingSpaceNoKeyFile) {
@@ -381,8 +383,10 @@
              sizeof(kEncStatefulTpm2Contents));
   WriteWrappedKey(key_->key_path(), kWrappedKeyEncStatefulTpm2);
 
-  ExpectSystemKeyFailed();
-  EXPECT_EQ(SystemKeyStatus::kUnknown, key_->system_key_status());
+  ExpectFreshKey();
+  EXPECT_EQ(EncryptionKeyStatus::kFresh, key_->encryption_key_status());
+  ExpectNeedsFinalization();
+  EXPECT_EQ(SystemKeyStatus::kFinalizationPending, key_->system_key_status());
 }
 
 TEST_F(EncryptionKeyTest, TpmExistingSpaceNotYetWritten) {