Fidelity Digital Assets has agreed to pay $500,000 to settle a California investigation into past restrictions on cryptocurrency withdrawals, in a deal that also obliges the firm to warn customers before ending support for crypto transfers. California customers have been able to move their holdings to external wallets since June 2025, after the company received regulatory clearance for the feature two months earlier.

California Attorney General Rob Bonta announced the settlement on Oct. 16 in a press release framed by his office as holding crypto platforms accountable. The case centers on claims about withdrawal restrictions at Fidelity Digital Asset Services; the settling entity, Fidelity Digital Assets, National Association, is the successor to that business. The fully executed settlement agreement (PDF) is published on the California Department of Justice website. Fidelity denies any wrongdoing and did not admit to violating any law.

Withdrawal access marks a key dividing line for retail crypto users: a customer who cannot send holdings off a platform depends on that platform to hold them, while outbound transfers allow crypto to be moved into wallets the customer controls. The California case centers on exactly that capability.

What the Settlement Requires

The $500,000 payment goes to the attorney general's office. It covers fees and costs tied to the investigation and settles the potential claims released under the agreement. The deal does not create a fund to compensate customers.

The settlement describes a covered period running from November 2022 through April 2025. During that time, California retail customers could buy and sell crypto on Fidelity's platform but could not send their holdings directly off the platform.

Fidelity received regulatory permission to enable outbound transfers in April 2025 — the same month the covered period closes — and the feature was rolled out to all California customers by June 2025. The agreement acknowledges that customers can now move crypto to outside wallets, subject to applicable law.

Under the terms of the deal, if Fidelity decides to stop offering the transfer feature to retail customers, it must provide California customers with reasonable written notice before doing so. The company nevertheless retains the right to restrict or block transfers where needed to protect its platform or individual account holders. That notice commitment is the settlement's principal forward-looking term, tied to the same off-platform access at the center of the investigation.

Crypto IRAs Follow Separate Rules

Tax-advantaged accounts are not covered by the settlement's transfer terms. That includes individual retirement accounts, known as IRAs, as well as accounts subject to federal rules on tax-free transfers between retirement accounts.

The agreement states that Fidelity plans to launch Fidelity Crypto IRA accounts in California, but it does not set a launch date. Fidelity's current IRA help page says the product remains unavailable in both California and Oregon.

In states where the Crypto IRA is offered, customers cannot transfer crypto out of the account, nor can they withdraw money or crypto directly. Instead, they can move funds from the account's U.S. dollar position to a linked Fidelity brokerage IRA and then use that account's withdrawal options.

Fidelity's state availability page, checked on Oct. 18, still lists crypto deposits and withdrawals for regular Fidelity Crypto accounts in California. With no launch date set in the agreement, updates to Fidelity's IRA help page and state availability page are the published places where a California Crypto IRA launch would first appear.

Source: Blockonomi