diff --git a/config_builder.go b/config_builder.go
index 3b64a39ab2..1a1354039d 100644
--- a/config_builder.go
+++ b/config_builder.go
@@ -173,6 +173,10 @@ type AuxComponents struct {
 	// AuxSigner is an optional signer that can be used to sign auxiliary
 	// leaves for certain custom channel types.
 	AuxSigner fn.Option[lnwallet.AuxSigner]
+
+	// AuxDataParser is an optional data parser that can be used to parse
+	// auxiliary data for certain custom channel types.
+	AuxDataParser fn.Option[AuxDataParser]
 }
 
 // DefaultWalletImpl is the default implementation of our normal, btcwallet
diff --git a/rpcserver.go b/rpcserver.go
index aad6a93af0..3442505014 100644
--- a/rpcserver.go
+++ b/rpcserver.go
@@ -46,6 +46,7 @@ import (
 	"github.com/lightningnetwork/lnd/contractcourt"
 	"github.com/lightningnetwork/lnd/discovery"
 	"github.com/lightningnetwork/lnd/feature"
+	"github.com/lightningnetwork/lnd/fn"
 	"github.com/lightningnetwork/lnd/funding"
 	"github.com/lightningnetwork/lnd/htlcswitch"
 	"github.com/lightningnetwork/lnd/htlcswitch/hop"
@@ -82,6 +83,7 @@ import (
 	"google.golang.org/grpc"
 	"google.golang.org/grpc/codes"
 	"google.golang.org/grpc/status"
+	"google.golang.org/protobuf/proto"
 	"gopkg.in/macaroon-bakery.v2/bakery"
 )
 
@@ -567,6 +569,17 @@ func MainRPCServerPermissions() map[string][]bakery.Op {
 	}
 }
 
+// AuxDataParser is an interface that is used to parse auxiliary custom data
+// within RPC messages. This is used to transform binary blobs to human-readable
+// JSON representations.
+type AuxDataParser interface {
+	// InlineParseCustomData replaces any custom data binary blob in the
+	// given RPC message with its corresponding JSON formatted data. This
+	// transforms the binary (likely TLV encoded) data to a human-readable
+	// JSON representation (still as byte slice).
+	InlineParseCustomData(msg proto.Message) error
+}
+
 // rpcServer is a gRPC, RPC front end to the lnd daemon.
 // TODO(roasbeef): pagination support for the list-style calls
 type rpcServer struct {
@@ -3544,7 +3557,7 @@ func (r *rpcServer) ChannelBalance(ctx context.Context,
 		unsettledRemoteBalance, pendingOpenLocalBalance,
 		pendingOpenRemoteBalance)
 
-	return &lnrpc.ChannelBalanceResponse{
+	resp := &lnrpc.ChannelBalanceResponse{
 		LocalBalance: &lnrpc.Amount{
 			Sat:  uint64(localBalance.ToSatoshis()),
 			Msat: uint64(localBalance),
@@ -3574,7 +3587,19 @@ func (r *rpcServer) ChannelBalance(ctx context.Context,
 		// Deprecated fields.
 		Balance:            int64(localBalance.ToSatoshis()),
 		PendingOpenBalance: int64(pendingOpenLocalBalance.ToSatoshis()),
-	}, nil
+	}
+
+	err = fn.MapOptionZ(
+		r.server.implCfg.AuxDataParser,
+		func(parser AuxDataParser) error {
+			return parser.InlineParseCustomData(resp)
+		},
+	)
+	if err != nil {
+		return nil, fmt.Errorf("error parsing custom data: %w", err)
+	}
+
+	return resp, nil
 }
 
 type (
@@ -4330,6 +4355,16 @@ func (r *rpcServer) ListChannels(ctx context.Context,
 		resp.Channels = append(resp.Channels, channel)
 	}
 
+	err = fn.MapOptionZ(
+		r.server.implCfg.AuxDataParser,
+		func(parser AuxDataParser) error {
+			return parser.InlineParseCustomData(resp)
+		},
+	)
+	if err != nil {
+		return nil, fmt.Errorf("error parsing custom data: %w", err)
+	}
+
 	return resp, nil
 }