Fidelity will pay California $500,000 for blocking crypto withdrawals for two and a half years.
Attorney General Rob Bonta announced the settlement on October 16, saying Californians could buy and sell bitcoin on Fidelity from late 2022 to 2025 but couldn’t move it out. Getting it into a personal wallet meant selling, paying any tax, and buying again elsewhere.
“Investors have a legal right to full, unrestricted access to what they buy,” Bonta said. Fidelity enabled withdrawals in 2025, and none of the $500,000 goes to customers.
$500K
paid to the attorney general, not customers
2½ years
without crypto withdrawals in California
2024
Robinhood Crypto settled a similar case
$2,000
Fidelity’s default daily withdrawal limit today
Why California says crypto you can’t withdraw wasn’t delivered
California’s Commodity Law bans commodity contracts made mainly for speculation or investment unless the dealer physically delivers the commodity within 28 days of payment. The state’s position is that cryptocurrency counts as delivered only once the buyer can withdraw it from the platform. A balance that can only be traded where it sits never passes that test.
The state has used this rule before. According to the attorney general’s office, the Fidelity case grew out of California’s September 2024 settlement with Robinhood Crypto over a similar block on withdrawals. During that inquiry, investigators learned that Fidelity’s crypto arm had kept the same restriction through its first two years.
The restriction cost customers who wanted out. Selling crypto to move it counts as disposing of a digital asset, and the IRS requires any gain or loss to be reported. Buying back elsewhere meant another round of trading fees and time out of the market while the money moved.
Fidelity says it was waiting on New York
When California’s Department of Justice contacted it, Fidelity Digital Asset Services confirmed it didn’t allow withdrawals. It said it was waiting for permission from the New York Department of Financial Services, its regulator at the time. New York approved transfers in April 2025.
November 2022
California retail customers can buy and sell crypto on Fidelity, but can’t withdraw it.
September 2024
California settles with Robinhood Crypto over a similar restriction. Fidelity’s comes to light during that investigation.
April 2025
New York approves transfers, and Fidelity starts rolling them out.
June 2025
Withdrawals reach all California customers.
December 12, 2025
Fidelity’s crypto arm becomes a national trust bank regulated by the Office of the Comptroller of the Currency, now called Fidelity Digital Assets, National Association.
October 14, 2026
The settlement is signed.
October 16, 2026
Bonta announces the deal.
The trust-bank conversion is why the signed agreement names Fidelity Digital Assets, National Association, rather than the company California originally investigated.
Where the $500,000 goes
The payment goes to the attorney general’s office, covering its investigation costs and settling the state’s claims. There is no fund for customers, including those who sold to move their coins between November 2022 and June 2025. The agreement says it neither creates new rights for customers nor takes away any private legal rights they already had.
Fidelity admitted no wrongdoing and denies violating California law. No court has ruled on whether the restriction was illegal.
What moving crypto off Fidelity involves today
According to Fidelity’s withdrawal help page, Fidelity Crypto customers can send BTC, ETH, LTC and SOL on each coin’s main network, plus FIDD, Fidelity’s dollar stablecoin, on Ethereum, subject to availability in their state.
| Rule | Fidelity’s terms | What it means for you |
|---|---|---|
| New address | Takes 2–3 business days to activate | Add your wallet address days before you need it |
| Daily limit | $2,000 standard; up to $25,000 with the advanced limit | Moving $10,000 at the standard limit takes five days. Higher amounts need an authenticator app. |
| Available balance | Recent funding activity can reduce it | Crypto you just bought may not be withdrawable straight away |
| Fees | Based on network pricing, taken from the crypto you send | The fee counts as a small sale on your tax records |
| Cancelling | Not possible once submitted | Check the address twice and send a test first |
Two of Fidelity’s own recommendations are worth following. Send about $1 to a new address and confirm it arrives before moving the rest. And if you never plan to move coins out, you can switch on a transfer lock that blocks withdrawals from the account entirely.
Withdrawals themselves aren’t taxable, but the network fee is paid by selling a sliver of the crypto you send. Fidelity reports that sale on Form 1099-DA and uses tax lots first-in, first-out, with no option to choose. If you’re comparing the cost of buying bitcoin across platforms, the exit terms belong in that comparison too.
Why crypto IRAs still can’t send coins
The settlement’s withdrawal terms don’t extend to Fidelity Crypto IRAs. The agreement exempts tax-advantaged accounts governed by federal law, citing the IRA section of the tax code and federal rules on how assets move tax-free between retirement accounts. Fidelity’s IRA guidance says these accounts can’t transfer crypto at all. Money comes out in dollars, through a linked Fidelity brokerage IRA, as its distribution instructions explain.
Fidelity plans to bring crypto IRAs to California, according to the agreement, which gives no launch date.
Which part could apply to you
You sold crypto on Fidelity to move it between 2022 and 2025. The settlement pays customers nothing, and by its terms it doesn’t take away any private legal rights you had.
You want to move coins now. Add your wallet address a few days ahead, send a $1 test, and plan around the $2,000 daily cap unless you raise it.
You’re waiting for a Fidelity crypto IRA in California. It’s planned but has no date, and coins held in it won’t be transferable to a personal wallet.
This article is provided for informational purposes only and does not constitute legal, tax, financial or investment advice.
Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work at Coindoo has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP.
Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem.
To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem.
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