Fidelity settles $500K with California over crypto withdrawal limits

California Attorney General Rob Bonta on October 16, 2026, announced a $500,000 settlement with Fidelity Digital Asset Services over the firm's crypto withdrawal restrictions. Fidelity blocked retail customers in California from transferring cryptocurrency to external wallets from November 2022 to June 2025. Fidelity denied wrongdoing.

Details

California alleged that Fidelity violated the state's Commodity Law, which requires "physical delivery" of commodity assets within 28 days of payment. Fidelity argued the delay was necessary while it awaited approval from the New York Department of Financial Services; the NYDFS granted permission in April 2025, and California customers regained transfer access by June 2025.

Under the settlement, Fidelity must provide reasonable written notice to California customers before discontinuing retail crypto transfers again. No customer compensation fund was created; the $500,000 goes toward investigation costs. Tax-advantaged IRA accounts are explicitly excluded from the settlement's transfer obligations — Fidelity Crypto IRAs are not yet available in California or Oregon, and where IRAs are offered, customers cannot withdraw crypto directly.

The deal follows a similar September 2024 settlement California reached with Robinhood Crypto over comparable withdrawal restrictions.

What this means for the market

The settlement signals that US state regulators are willing to pursue major custodians for restricting customer withdrawals without notice. California's enforcement approach tends to set national standards: platforms limiting transfers without written notice now face clear legal exposure. For crypto IRA investors, the carveout in the agreement highlights an uneven regulatory landscape in tax-advantaged accounts — a gap likely to draw further scrutiny as Fidelity expands its crypto IRA rollout.

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