Fidelity settles with California over crypto withdrawal restrictions

Fidelity Digital Assets has agreed to a $500,000 settlement with the California Attorney General following allegations that the company blocked cryptocurrency withdrawals for California retail customers for approximately two and a half years.

Between late 2022 and early 2025, customers could buy and sell bitcoin on the platform but were unable to transfer assets directly to personal wallets. This restriction forced users to sell their holdings—triggering potential tax liabilities—and repurchase assets elsewhere to move them. California officials argued that under state commodity law, a commodity is only considered delivered once a buyer can withdraw it.

The $500,000 payment is intended to cover investigation-related fees and costs for the state attorney general; the settlement does not include a fund for customer compensation. Fidelity denies any wrongdoing and entered the agreement without admitting to legal violations.

Under the terms of the deal, Fidelity must provide reasonable written notice to California customers if it decides to discontinue retail crypto transfer features in the future. However, the agreement preserves security-related restrictions and excludes tax-advantaged accounts, such as Individual Retirement Accounts (IRAs), from these transfer obligations. Crypto IRAs remain unavailable in California and Oregon.