diff --git a/channeld/channeld.c b/channeld/channeld.c
index 9dc7ae3ac..63a9ae599 100644
--- a/channeld/channeld.c
+++ b/channeld/channeld.c
@@ -413,7 +413,7 @@ static void send_announcement_signatures(struct peer *peer)
 static u8 *create_channel_announcement(const tal_t *ctx, struct peer *peer)
 {
 	int first, second;
-	u8 *cannounce, *features = tal_arr(ctx, u8, 0);
+	u8 *cannounce, *features = get_agreed_channelfeatures(tmpctx, peer->features);
 
 	if (peer->channel_direction == 0) {
 		first = LOCAL;
@@ -435,7 +435,6 @@ static u8 *create_channel_announcement(const tal_t *ctx, struct peer *peer)
 	    &peer->node_ids[second],
 	    &peer->channel->funding_pubkey[first],
 	    &peer->channel->funding_pubkey[second]);
-	tal_free(features);
 	return cannounce;
 }
 
diff --git a/common/features.c b/common/features.c
index fd0add267..9387e013b 100644
--- a/common/features.c
+++ b/common/features.c
@@ -28,6 +28,7 @@ enum feature_place {
 	INIT_FEATURE,
 	GLOBAL_INIT_FEATURE,
 	NODE_ANNOUNCE_FEATURE,
+	CHANNEL_FEATURE,
 	BOLT11_FEATURE,
 };
 #define NUM_FEATURE_PLACE (BOLT11_FEATURE+1)
@@ -140,6 +141,44 @@ u8 *get_offered_globalinitfeatures(const tal_t *ctx)
 	return mkfeatures(ctx, GLOBAL_INIT_FEATURE);
 }
 
+static void clear_feature_bit(u8 *features, u32 bit)
+{
+	size_t bytenum = bit / 8, bitnum = bit % 8, len = tal_count(features);
+
+	if (bytenum >= len)
+		return;
+
+	features[len - 1 - bytenum] &= ~(1 << bitnum);
+}
+
+/* BOLT #7:
+ *
+ *   - MUST set `features` based on what features were negotiated for this channel, according to [BOLT #9](09-features.md#assigned-features-flags)
+ *  - MUST set `len` to the minimum length required to hold the `features` bits
+ *  it sets.
+ */
+u8 *get_agreed_channelfeatures(const tal_t *ctx, const u8 *theirfeatures)
+{
+	u8 *f = mkfeatures(ctx, CHANNEL_FEATURE);
+	size_t max_len = 0;
+
+	/* Clear any features which they didn't offer too */
+	for (size_t i = 0; i < 8 * tal_count(f); i += 2) {
+		if (!feature_offered(f, i))
+			continue;
+		if (!feature_offered(theirfeatures, i)) {
+			clear_feature_bit(f, COMPULSORY_FEATURE(i));
+			clear_feature_bit(f, OPTIONAL_FEATURE(i));
+			continue;
+		}
+		max_len = (i / 8) + 1;
+	}
+
+	/* Trim to length */
+	tal_resize(&f, max_len);
+	return f;
+}
+
 u8 *get_offered_bolt11features(const tal_t *ctx)
 {
 	return mkfeatures(ctx, BOLT11_FEATURE);
@@ -276,3 +315,4 @@ u8 *featurebits_or(const tal_t *ctx, const u8 *f1 TAKES, const u8 *f2 TAKES)
 
 	return result;
 }
+
diff --git a/common/features.h b/common/features.h
index 1ca900602..96b8a9e8e 100644
--- a/common/features.h
+++ b/common/features.h
@@ -14,6 +14,9 @@ u8 *get_offered_globalinitfeatures(const tal_t *ctx);
 u8 *get_offered_nodefeatures(const tal_t *ctx);
 u8 *get_offered_bolt11features(const tal_t *ctx);
 
+/* For the features in channel_announcement */
+u8 *get_agreed_channelfeatures(const tal_t *ctx, const u8 *theirfeatures);
+
 /* Is this feature bit requested? (Either compulsory or optional) */
 bool feature_offered(const u8 *features, size_t f);