diff --git a/coprocessor/fhevm-engine/Cargo.lock b/coprocessor/fhevm-engine/Cargo.lock
index a54297553f..70bcf18336 100644
--- a/coprocessor/fhevm-engine/Cargo.lock
+++ b/coprocessor/fhevm-engine/Cargo.lock
@@ -3425,6 +3425,8 @@ dependencies = [
  "tonic",
  "tonic-build",
  "tracing",
+ "tracing-opentelemetry",
+ "tracing-subscriber",
 ]
 
 [[package]]
diff --git a/coprocessor/fhevm-engine/fhevm-engine-common/Cargo.toml b/coprocessor/fhevm-engine/fhevm-engine-common/Cargo.toml
index d9d9652409..8ce7d689c2 100644
--- a/coprocessor/fhevm-engine/fhevm-engine-common/Cargo.toml
+++ b/coprocessor/fhevm-engine/fhevm-engine-common/Cargo.toml
@@ -23,6 +23,8 @@ tfhe = { workspace = true }
 tonic  = { workspace = true }
 tokio = { workspace = true }
 tracing = { workspace = true }
+tracing-opentelemetry = { workspace = true }
+tracing-subscriber = { workspace = true }
 bytesize = { workspace = true}
 tokio-util = { workspace = true}
 axum = { workspace = true}
diff --git a/coprocessor/fhevm-engine/fhevm-engine-common/src/telemetry.rs b/coprocessor/fhevm-engine/fhevm-engine-common/src/telemetry.rs
index 68c78184a3..53765d8b93 100644
--- a/coprocessor/fhevm-engine/fhevm-engine-common/src/telemetry.rs
+++ b/coprocessor/fhevm-engine/fhevm-engine-common/src/telemetry.rs
@@ -17,9 +17,37 @@ use std::{
 };
 use tokio::sync::RwLock;
 use tracing::{debug, info, warn};
+use tracing_subscriber::{layer::SubscriberExt, util::SubscriberInitExt};
 
 pub const TXN_ID_ATTR_KEY: &str = "txn_id";
 
+/// Calls provider shutdown exactly once when dropped.
+pub struct TracerProviderGuard {
+    tracer_provider: Option<SdkTracerProvider>,
+}
+
+impl TracerProviderGuard {
+    fn new(trace_provider: SdkTracerProvider) -> Self {
+        Self {
+            tracer_provider: Some(trace_provider),
+        }
+    }
+
+    fn shutdown_once(&mut self) {
+        if let Some(provider) = self.tracer_provider.take() {
+            if let Err(err) = provider.shutdown() {
+                warn!(error = %err, "Failed to shutdown OTLP tracer provider");
+            }
+        }
+    }
+}
+
+impl Drop for TracerProviderGuard {
+    fn drop(&mut self) {
+        self.shutdown_once();
+    }
+}
+
 pub static HOST_TXN_LATENCY_CONFIG: OnceLock<MetricsConfig> = OnceLock::new();
 pub(crate) static HOST_TXN_LATENCY_HISTOGRAM: LazyLock<Histogram> = LazyLock::new(|| {
     register_histogram(
@@ -38,17 +66,61 @@ pub(crate) static ZKPROOF_TXN_LATENCY_HISTOGRAM: LazyLock<Histogram> = LazyLock:
     )
 });
 
-pub fn setup_otlp(
+pub fn init_otel(
     service_name: &str,
-) -> Result<(), Box<dyn std::error::Error + Send + Sync + 'static>> {
-    let _ = setup_otlp_tracer(service_name, "otlp-layer")?;
-    Ok(())
+) -> Result<Option<TracerProviderGuard>, Box<dyn std::error::Error + Send + Sync + 'static>> {
+    if service_name.is_empty() {
+        return Ok(None);
+    }
+
+    let (_tracer, trace_provider) = setup_otel_with_tracer(service_name, "otlp-layer")?;
+    opentelemetry::global::set_tracer_provider(trace_provider.clone());
+    Ok(Some(TracerProviderGuard::new(trace_provider)))
 }
 
-pub fn setup_otlp_tracer(
+pub fn init_json_subscriber(
+    log_level: tracing::Level,
     service_name: &str,
     tracer_name: &'static str,
-) -> Result<opentelemetry_sdk::trace::Tracer, Box<dyn std::error::Error + Send + Sync + 'static>> {
+) -> Result<Option<TracerProviderGuard>, Box<dyn std::error::Error + Send + Sync + 'static>> {
+    let level_filter = tracing_subscriber::filter::LevelFilter::from_level(log_level);
+    let fmt_layer = tracing_subscriber::fmt::layer()
+        .json()
+        .with_target(false)
+        .with_current_span(true)
+        .with_span_list(false)
+        .with_level(true);
+    let base = tracing_subscriber::registry()
+        .with(level_filter)
+        .with(fmt_layer);
+
+    if service_name.is_empty() {
+        base.try_init()?;
+        return Ok(None);
+    }
+
+    let (tracer, trace_provider) = match setup_otel_with_tracer(service_name, tracer_name) {
+        Ok(v) => v,
+        Err(err) => {
+            // Keep JSON logs even if OTLP export cannot be initialized.
+            base.try_init()?;
+            return Err(err);
+        }
+    };
+
+    let telemetry_layer = tracing_opentelemetry::layer().with_tracer(tracer);
+    base.with(telemetry_layer).try_init()?;
+    opentelemetry::global::set_tracer_provider(trace_provider.clone());
+    Ok(Some(TracerProviderGuard::new(trace_provider)))
+}
+
+fn setup_otel_with_tracer(
+    service_name: &str,
+    tracer_name: &'static str,
+) -> Result<
+    (opentelemetry_sdk::trace::Tracer, SdkTracerProvider),
+    Box<dyn std::error::Error + Send + Sync + 'static>,
+> {
     let otlp_exporter = opentelemetry_otlp::SpanExporter::builder()
         .with_tonic()
         .build()?;
@@ -66,9 +138,7 @@ pub fn setup_otlp_tracer(
         .build();
 
     let tracer = trace_provider.tracer(tracer_name);
-    opentelemetry::global::set_tracer_provider(trace_provider);
-
-    Ok(tracer)
+    Ok((tracer, trace_provider))
 }
 
 #[derive(Clone)]
@@ -526,3 +596,28 @@ pub async fn try_end_zkproof_transaction(
 
     Ok(())
 }
+
+#[cfg(test)]
+mod tests {
+    use super::*;
+
+    #[test]
+    fn otel_guard_shutdown_once_disarms_provider() {
+        let provider = SdkTracerProvider::builder().build();
+        let mut guard = TracerProviderGuard::new(provider);
+        assert!(guard.tracer_provider.is_some());
+
+        guard.shutdown_once();
+        assert!(guard.tracer_provider.is_none());
+
+        // A second shutdown is a no-op.
+        guard.shutdown_once();
+        assert!(guard.tracer_provider.is_none());
+    }
+
+    #[test]
+    fn setup_otel_empty_service_name_returns_none() {
+        let otel_guard = init_otel("").unwrap();
+        assert!(otel_guard.is_none());
+    }
+}
diff --git a/coprocessor/fhevm-engine/gw-listener/src/bin/gw_listener.rs b/coprocessor/fhevm-engine/gw-listener/src/bin/gw_listener.rs
index 0c262935b0..2226136f33 100644
--- a/coprocessor/fhevm-engine/gw-listener/src/bin/gw_listener.rs
+++ b/coprocessor/fhevm-engine/gw-listener/src/bin/gw_listener.rs
@@ -108,11 +108,13 @@ async fn main() -> anyhow::Result<()> {
         .with_max_level(conf.log_level)
         .init();
 
-    if !conf.service_name.is_empty() {
-        if let Err(err) = telemetry::setup_otlp(&conf.service_name) {
+    let _otel_guard = match telemetry::init_otel(&conf.service_name) {
+        Ok(otel_guard) => otel_guard,
+        Err(err) => {
             error!(error = %err, "Failed to setup OTLP");
+            None
         }
-    }
+    };
 
     info!(gateway_url = %conf.gw_url, max_retries = %conf.provider_max_retries,
          retry_interval = ?conf.provider_retry_interval, "Connecting to Gateway");
diff --git a/coprocessor/fhevm-engine/host-listener/src/cmd/mod.rs b/coprocessor/fhevm-engine/host-listener/src/cmd/mod.rs
index 2898f3aeca..19d9d9b9a2 100644
--- a/coprocessor/fhevm-engine/host-listener/src/cmd/mod.rs
+++ b/coprocessor/fhevm-engine/host-listener/src/cmd/mod.rs
@@ -1024,11 +1024,13 @@ pub async fn main(args: Args) -> anyhow::Result<()> {
         )
     };
 
-    if !args.service_name.is_empty() {
-        if let Err(err) = telemetry::setup_otlp(&args.service_name) {
+    let _otel_guard = match telemetry::init_otel(&args.service_name) {
+        Ok(otel_guard) => otel_guard,
+        Err(err) => {
             error!(error = %err, "Failed to setup OTLP");
+            None
         }
-    }
+    };
 
     let mut log_iter = InfiniteLogIter::new(&args);
     let chain_id = log_iter.get_chain_id().await?;
diff --git a/coprocessor/fhevm-engine/host-listener/src/poller/mod.rs b/coprocessor/fhevm-engine/host-listener/src/poller/mod.rs
index 8c6520aeaf..a4104b9647 100644
--- a/coprocessor/fhevm-engine/host-listener/src/poller/mod.rs
+++ b/coprocessor/fhevm-engine/host-listener/src/poller/mod.rs
@@ -90,11 +90,13 @@ pub struct PollerConfig {
 }
 
 pub async fn run_poller(config: PollerConfig) -> Result<()> {
-    if !config.service_name.is_empty() {
-        if let Err(err) = telemetry::setup_otlp(&config.service_name) {
-            warn!(error = %err, "Failed to setup OTLP");
+    let _otel_guard = match telemetry::init_otel(&config.service_name) {
+        Ok(otel_guard) => otel_guard,
+        Err(err) => {
+            error!(error = %err, "Failed to setup OTLP");
+            None
         }
-    }
+    };
 
     let acl_address = config.acl_address;
     let tfhe_address = config.tfhe_address;
diff --git a/coprocessor/fhevm-engine/host-listener/tests/host_listener_integration_tests.rs b/coprocessor/fhevm-engine/host-listener/tests/host_listener_integration_tests.rs
index dc254de057..fc3a1e9bac 100644
--- a/coprocessor/fhevm-engine/host-listener/tests/host_listener_integration_tests.rs
+++ b/coprocessor/fhevm-engine/host-listener/tests/host_listener_integration_tests.rs
@@ -316,7 +316,11 @@ async fn test_listener_no_event_loss(
     reorg: bool,
 ) -> Result<(), anyhow::Error> {
     let setup = setup(None).await?;
-    let args = setup.args.clone();
+    let mut args = setup.args.clone();
+    // This test intentionally aborts/restarts the listener many times.
+    // Keep telemetry disabled here to avoid coupling event-loss assertions
+    // with exporter/shutdown timing.
+    args.service_name.clear();
 
     // Start listener in background task
     let listener_handle = tokio::spawn(main(args.clone()));
diff --git a/coprocessor/fhevm-engine/sns-worker/src/bin/sns_worker.rs b/coprocessor/fhevm-engine/sns-worker/src/bin/sns_worker.rs
index d1ec6ffa91..59d258ff65 100644
--- a/coprocessor/fhevm-engine/sns-worker/src/bin/sns_worker.rs
+++ b/coprocessor/fhevm-engine/sns-worker/src/bin/sns_worker.rs
@@ -4,7 +4,6 @@ use fhevm_engine_common::telemetry;
 use tokio::signal::unix;
 use tokio_util::sync::CancellationToken;
 use tracing::error;
-use tracing_subscriber::{layer::SubscriberExt, util::SubscriberInitExt};
 mod utils;
 
 fn handle_sigint(token: CancellationToken) {
@@ -69,40 +68,15 @@ async fn main() {
 
     let mut otlp_setup_error: Option<String> = None;
 
-    let otel_tracer = if config.service_name.is_empty() {
-        None
-    } else {
-        match telemetry::setup_otlp_tracer(&config.service_name, "otlp-layer") {
-            Ok(tracer) => Some(tracer),
+    let _otel_guard =
+        match telemetry::init_json_subscriber(config.log_level, &config.service_name, "otlp-layer")
+        {
+            Ok(guard) => guard,
             Err(err) => {
                 otlp_setup_error = Some(err.to_string());
                 None
             }
-        }
-    };
-
-    let level_filter = tracing_subscriber::filter::LevelFilter::from_level(config.log_level);
-
-    let fmt_layer = tracing_subscriber::fmt::layer()
-        .json()
-        // drop "target" field so the logs are not too verbose. Instead, span names are used.
-        .with_target(false)
-        // keep "span"
-        .with_current_span(true)
-        // drop "spans"
-        .with_span_list(false)
-        .with_level(true);
-
-    let base = tracing_subscriber::registry()
-        .with(level_filter)
-        .with(fmt_layer);
-
-    if let Some(tracer) = otel_tracer {
-        let otel_layer = tracing_opentelemetry::layer().with_tracer(tracer);
-        base.with(otel_layer).init();
-    } else {
-        base.init();
-    }
+        };
 
     if let Some(err) = otlp_setup_error {
         error!(error = %err, "Failed to setup OTLP");
diff --git a/coprocessor/fhevm-engine/tfhe-worker/src/lib.rs b/coprocessor/fhevm-engine/tfhe-worker/src/lib.rs
index d88e033787..7367dcc9c9 100644
--- a/coprocessor/fhevm-engine/tfhe-worker/src/lib.rs
+++ b/coprocessor/fhevm-engine/tfhe-worker/src/lib.rs
@@ -65,11 +65,13 @@ pub async fn async_main(
     let cancel_token = CancellationToken::new();
     info!(target: "async_main", args = ?args, "Starting runtime with args");
 
-    if !args.service_name.is_empty() {
-        if let Err(err) = telemetry::setup_otlp(&args.service_name) {
+    let _otel_guard = match telemetry::init_otel(&args.service_name) {
+        Ok(otel_guard) => otel_guard,
+        Err(err) => {
             error!(error = %err, "Failed to setup OTLP");
+            None
         }
-    }
+    };
 
     let database_url = args.database_url.clone().unwrap_or_default();
     let health_check = health_check::HealthCheck::new(database_url);
diff --git a/coprocessor/fhevm-engine/transaction-sender/src/bin/transaction_sender.rs b/coprocessor/fhevm-engine/transaction-sender/src/bin/transaction_sender.rs
index 2cab182235..2ccd6210ea 100644
--- a/coprocessor/fhevm-engine/transaction-sender/src/bin/transaction_sender.rs
+++ b/coprocessor/fhevm-engine/transaction-sender/src/bin/transaction_sender.rs
@@ -308,11 +308,13 @@ async fn main() -> anyhow::Result<()> {
         }
     };
 
-    if !conf.service_name.is_empty() {
-        if let Err(err) = telemetry::setup_otlp(&conf.service_name) {
+    let _otel_guard = match telemetry::init_otel(&conf.service_name) {
+        Ok(otel_guard) => otel_guard,
+        Err(err) => {
             error!(error = %err, "Failed to setup OTLP");
+            None
         }
-    }
+    };
 
     let abstract_signer: AbstractSigner;
     match conf.signer_type {
diff --git a/coprocessor/fhevm-engine/zkproof-worker/src/bin/zkproof_worker.rs b/coprocessor/fhevm-engine/zkproof-worker/src/bin/zkproof_worker.rs
index 7cb1444a19..7cd21bcd89 100644
--- a/coprocessor/fhevm-engine/zkproof-worker/src/bin/zkproof_worker.rs
+++ b/coprocessor/fhevm-engine/zkproof-worker/src/bin/zkproof_worker.rs
@@ -103,11 +103,13 @@ async fn main() {
         pg_auto_explain_with_min_duration: args.pg_auto_explain_with_min_duration,
     };
 
-    if !args.service_name.is_empty() {
-        if let Err(err) = telemetry::setup_otlp(&args.service_name) {
+    let _otel_guard = match telemetry::init_otel(&args.service_name) {
+        Ok(otel_guard) => otel_guard,
+        Err(err) => {
             error!(error = %err, "Failed to setup OTLP");
+            None
         }
-    }
+    };
 
     let cancel_token = CancellationToken::new();
     let Some(service) = ZkProofService::create(conf, cancel_token.child_token()).await else {