California settles with Fidelity over past crypto withdrawal limits

California Attorney General Rob Bonta announced on October 16 that Fidelity Digital Assets had agreed to pay $500,000 to resolve potential state claims over past limits on cryptocurrency withdrawals by California retail customers.

The fully executed agreement is narrower than a finding that Fidelity broke the law. The attorney general says the earlier restrictions created a basis for potential claims under the California Commodity Law. Fidelity denies wrongdoing, damages and liability, and the agreement says it is not an admission or a court or agency order.

The case matters because California tied control of purchased crypto to the ability to move it off a dealer’s platform. The settlement also shows how state commodity law can reach a crypto service even after its regulatory structure and product features have changed.

What the agreement covers

The agreement defines the covered conduct as activity from November 1, 2022 through June 20, 2025 involving the ability of California customers to transfer crypto off Fidelity’s platform. Its recitals say those customers could buy and sell cryptocurrency from November 2022 through April 2025 but could not transfer it directly to an external wallet.

According to the agreement, Fidelity’s prudential regulator at the time did not approve transfer functionality until April 2025. Fidelity then rolled it out to all California customers by June 2025. The state announcement identifies that regulator as the New York Department of Financial Services.

The attorney general’s legal theory turns on California’s treatment of commodity contracts entered primarily for speculation or investment. The state says such a contract generally falls within a statutory ban unless the dealer physically delivers the commodity within 28 days after payment. For cryptocurrency treated as a commodity, the state’s announcement says delivery occurs once the customer can withdraw it from the dealer’s platform.

That is the state’s enforcement position in this settlement, not a judicial holding that establishes a nationwide rule. The agreement contains no adjudication of fact or law, and it resolves only claims the California attorney general can release for the defined conduct.

Payment and continuing terms

Fidelity Digital Assets, National Association, the successor to Fidelity Digital Asset Services, agreed to pay the state $500,000 for investigative fees and costs and to settle the released potential claims. Payment is due within 30 days after the company receives the attorney general’s written processing instructions; the announcement does not establish that payment had already cleared on October 16.

The agreement says California customers currently can transfer crypto to external wallets, subject to applicable laws and rules. If Fidelity stops offering transfer functionality to retail customers, it must provide reasonable written notice. Fidelity may still restrict particular transfers for platform or account-holder safety and security.

There is also an explicit exception for tax-advantaged accounts. The agreement does not require withdrawal functionality for planned Fidelity Crypto IRA accounts or other accounts subject to federal requirements governing non-taxable transfers and rollovers.

Fidelity’s institutional form changed after the disputed period. The agreement says the business converted into a national trust bank regulated by the Office of the Comptroller of the Currency on December 12, 2025, and now operates as Fidelity Digital Assets, National Association. That later conversion does not alter the settlement’s historical window.

What remains unresolved

The settlement releases California’s civil claims against specified Fidelity parties for the covered conduct once the payment condition is satisfied. It does not release obligations created by the agreement, claims against other entities, criminal or tax liability, antitrust claims, or conduct outside the defined window.

The record reviewed does not quantify how many California customers were affected, the value of crypto that could not be withdrawn or any customer loss. It also does not establish that withdrawals were permanently denied; the documented limitation ended after regulatory approval and rollout in 2025. The next verifiable milestones are payment and Fidelity’s continued compliance with the notice and transfer terms.