Fidelity Settles California Crypto Lawsuit

The firm agreed to a $500,000 settlement over allegations it violated state law by restricting cryptocurrency transfers.

Updated on Oct. 21, 2026 in Investing

Fidelity Settles California Crypto Lawsuit

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Fidelity Digital Assets reached a $500,000 settlement with the California Attorney General to resolve claims that the company violated the California Commodity Law of 1990. The dispute centered on restrictions that prevented California customers from moving cryptocurrency to external wallets.

Why it matters

California authorities define the ability to withdraw digital assets as the equivalent of physical delivery under state law, making these transfer capabilities a legal requirement for platforms. The settlement clarifies compliance expectations for financial institutions operating digital asset services within the state.

The settlement requires a $500,000 payment to cover investigative costs, though the agreement does not provide direct compensation to affected customers. Fidelity denied any wrongdoing and made no admission of violating state law.

The players

Fidelity Digital Assets

This subsidiary of Fidelity Investments provides institutional and retail services for digital asset custody and trading.

Rob Bonta

He serves as the Attorney General of California and acts as the state's top law enforcement official.

The details

Fidelity had restricted external cryptocurrency transfers for California users from November 2022 until April 2025, citing a lack of required approval from the New York Department of Financial Services. Under the new agreement, the company must provide written notice to customers before discontinuing such features in the future, though tax-advantaged accounts remain exempt from these specific requirements.

November 2022: Fidelity restricted external cryptocurrency transfers for California customers.
April 2025: Fidelity received regulatory approval to enable transfer capability.
June 2025: Fidelity extended transfer capability to California retail customers.
October 16, 2026: California Attorney General announced the settlement agreement.

Market Dynamics

This settlement aligns with ongoing efforts by regulators to apply the California Commodity Law of 1990 to the evolving digital asset sector. It highlights how state-level legal frameworks are forcing financial institutions to standardize their withdrawal processes to meet local delivery requirements.

California retail customers now have the guaranteed right to transfer cryptocurrency to external wallets, provided they hold eligible accounts. Investors should note that tax-advantaged accounts are currently excluded from these transfer requirements and that the firm does not yet offer crypto IRA products in the state.

The takeaway

The settlement reinforces that state-level commodity laws can significantly impact the functionality of digital asset platforms for retail users. Customers should review the specific features available for their account types, particularly if they are interested in upcoming retirement-focused crypto products.