Fidelity’s crypto arm will pay California $500,000 to close an investigation into a period of roughly two and a half years in which the state’s retail customers could buy and sell crypto on its platform but could not move any of it off the platform. Attorney General Rob Bonta announced the settlement on Friday 16 October 2026. The signed agreement, which the office published with its announcement, puts in writing that ordinary California accounts can now send crypto to outside wallets. It also carves out one product by name: the Fidelity crypto IRA, which Fidelity says it plans to launch in California, is not covered by that right to transfer.
The $500,000 is paid “in recognition of the Attorney General’s fees and costs”, according to the agreement. It is not described as a penalty, and the document sets up no fund to compensate customers. Fidelity denies wrongdoing and admits no violation of law; the press release says the company disputes that it broke California law. No complaint was filed in court.
What Fidelity agreed to with the California Attorney General
The counterparty is Fidelity Digital Assets, National Association, the successor to Fidelity Digital Asset Services, LLC, which the Attorney General’s office calls “the cryptocurrency subsidiary of Fidelity Investments”. Fidelity Crypto is the consumer brand that runs on top of it. The unit changed shape on 12 December 2025, when it converted into a national trust bank supervised by the Office of the Comptroller of the Currency (OCC), according to the settlement agreement.
The Attorney General opened the inquiry under California Government Code section 11180 and following, which lets the office investigate before deciding whether to sue. It looked at “the sale and control of cryptocurrencies” by the Fidelity unit and concluded there was an evidentiary basis for claims under the California Commodity Law of 1990. The agreement then stops short of any finding: it is not an adjudication and “not a final order of any court or governmental authority”.
The facts set out in the recitals are short. From November 2022 through April 2025, under its customer agreement, Fidelity’s California retail customers could trade crypto but not transfer it off the platform. The agreement says the unit’s prudential regulator at the time did not approve transfers until April 2025, and that transfers reached all California customers by June 2025. The conduct the deal settles runs from 1 November 2022 to 20 June 2025.
“Investors have a legal right to full, unrestricted access to what they buy,” he said in the press release. He added that by restricting withdrawals, the Fidelity unit “left California investors in limbo”.
Fidelity must pay by electronic transfer within 30 days of receiving payment instructions from the state. In exchange, the Attorney General releases Fidelity Digital Assets, its predecessor, its parent companies, affiliates and officers from claims over the covered conduct, once the money arrives. The release does not cover any other conduct, and expressly leaves out liability under California criminal or tax law and state or federal antitrust law. The agreement also creates no private right of action and takes none away, so customers keep whatever claims they may have. Nothing in the record suggests any customer has sued.
The Fidelity crypto settlement in figures
| Item | Value | Source |
|---|---|---|
| Amount paid | $500,000 (fees and costs) | Agreement, para 3 |
| Settlement announced | 16 October 2026 | California AG |
| No withdrawals for California retail customers | November 2022 to April 2025 (about 29 months) | Agreement, recitals |
| Transfers live for all California customers | By June 2025 | Agreement, recitals |
| Covered conduct | 1 November 2022 to 20 June 2025 | Agreement, para 4 |
| Payment deadline | 30 days after payment instructions | Agreement, para 3 |
| Customer compensation | None in the agreement | Agreement |
| Customers and coins affected | Not disclosed | California AG |
| Robinhood Crypto precedent | $3.9 million penalty, 4 September 2024 | California AG |
California treats a withdrawal as delivery of the coins
The legal theory is in the press release rather than the agreement. California law bars commodity contracts entered into mainly for speculation or investment unless the seller physically delivers the commodity within 28 days of payment. For crypto, the Attorney General’s office says, delivery happens only when the investor can withdraw the coins. A customer who can see a balance but cannot take it anywhere has, in that reading, not received anything.
Fidelity’s explanation, as the Attorney General’s office relays it, is that it was waiting for permission from the New York Department of Financial Services (NYDFS), which arrived in April 2025. The agreement itself never names NYDFS; it refers only to the “prudential regulator” of the time.
The investigation did not start from a complaint about Fidelity. According to the press release, it grew out of the state’s earlier case against Robinhood Crypto: while looking into Robinhood, the Department of Justice learned that the Fidelity unit kept a similar restriction “during its first two years of operation”. The agreement’s own dates are longer: November 2022 to April 2025.
Ordinary accounts keep a right to transfer, with conditions
The forward-looking part of the deal is paragraph 1. As of the agreement’s date, California customers can transfer crypto to external wallets “in accordance with, and subject to, any applicable laws”. If Fidelity decides to stop offering transfers as a retail feature, it must give California customers reasonable written notice first. It keeps the power to restrict or disallow transfers to protect the platform’s safety and security, or an individual account holder.
That is a notice obligation, not a ban on ever switching transfers off. Still, it means a quiet return to a buy-only model would breach the agreement. CryptoSlate reported on 18 October that Fidelity’s state-availability page lists crypto deposits and withdrawals for ordinary accounts in California.
The Fidelity crypto IRA sits outside the deal
Paragraph 2 deals with retirement accounts. The agreement records that Fidelity “plans to launch in California Fidelity Crypto IRA accounts”, in line with the tax-advantaged accounts it already offers in other states. It gives no date. Notwithstanding the transfer right in paragraph 1, it says Fidelity does not provide, and is not required to provide, transfer functionality for tax-advantaged accounts subject to federal law, “including but not limited to 26 U.S.C. section 408”, the section of the tax code that governs individual retirement accounts. The carve-out also covers any account for which federal law sets specific requirements for a nontaxable transfer, such as a direct rollover from one tax-advantaged account to another.
That is the only reason the agreement gives: these accounts are subject to federal law. Fidelity’s own help page for the product is blunt: “Crypto transfers aren’t available for Fidelity Crypto IRAs.” Customers cannot withdraw money or crypto directly from the crypto IRA. Dollars move to the linked Fidelity brokerage IRA, and Fidelity says those moves are nonreportable and nontaxable. The IRA custodian is Fidelity Management Trust Company, while the coins are held by Fidelity Digital Assets. Buys and sells carry a 1% trading fee, with no opening, maintenance or custody fees. For now the product is not offered in California or Oregon.
As general background, and not something the agreement says: under US tax rules, assets taken out of an IRA into the owner’s own hands are normally treated as a distribution rather than a transfer, which is why IRA assets stay with a custodian. How that applies to any one person depends on their situation and is a question for a tax professional, not for this article. The practical effect of the agreement is simpler: a California saver who buys bitcoin in a Fidelity crypto IRA, once the product launches there, will not be able to send it to a personal wallet, and the settlement does not change that.
Why a withdrawal to self-custody matters
Coins on a platform are a claim on that platform. The company holds the keys, decides when transfers run and sets the rules if it gets into trouble. Self-custody means holding the private keys yourself, so that nobody else can freeze or move the coins. Our guide to crypto wallets, custody and how to choose one covers the trade-offs, including the risk of losing keys you hold alone.
Without a transfer button, a customer’s options shrink to two: keep the coins on the platform, or sell them for dollars. Moving to a cheaper or safer exchange, using the coins on-chain, or putting them in cold storage all require a withdrawal. California’s 28-day delivery reading targets exactly that situation. At federal level, custody is being rewritten on a separate track, for professional money: the SEC’s proposed crypto custody rules for advisers and funds do not touch retail platforms like Fidelity Crypto.
Robinhood paid $3.9 million for the same problem in 2024
California has been here before. On 4 September 2024, the Attorney General announced a $3.9 million settlement with Robinhood Crypto. According to that release, its customers could not withdraw crypto from 2018 to 2022 and, to leave the platform, had to sell their holdings back to Robinhood. That case also covered statements about the venues where orders were executed and about who held customer crypto. The office called it its first public action against a crypto company, and the deal required Robinhood to let customers withdraw to their own wallets.
Fidelity’s $500,000 is about 13% of Robinhood’s figure, and the label differs. The Attorney General described Robinhood’s sum as a penalty, as did The Block at the time, while Fidelity’s is framed as the state’s fees and costs. Fidelity’s case also has no misstatement element: it is only about withdrawals. Settlements with crypto firms are being tested at federal level too: a judge has refused to undo Gemini’s $5 million settlement with the CFTC.
What is still unknown, and the next dates
Several basic facts are missing from both documents. The Attorney General has not said how many California customers were affected, which coins they held, or whether anyone lost money by having to sell instead of withdraw. The agreement contains no restitution. Nor do the documents say what exactly the regulator had to approve: the press release names NYDFS, while the agreement speaks only of the “prudential regulator at the time”.
The case covers California only. No other state action against Fidelity over withdrawals has surfaced, and we found no statement from Fidelity on the settlement as of 19 October.
The next step is the payment, due within 30 days of the state’s written payment instructions. Neither document says when those instructions go out, and the release of claims takes effect only once Fidelity has paid in full. There will be no court hearing, because there is no case. The date to watch for retirement savers is the California launch of the Fidelity crypto IRA, which the agreement anticipates but does not schedule.