Fidelity Settles for $500,000 Over Crypto Withdrawal Restrictions in California

California has reached a $500,000 settlement with Fidelity Digital Asset Services regarding withdrawal restrictions that previously prevented some customers from transferring purchased cryptocurrencies to their own wallets. The settlement was announced by Attorney General Rob Bonta on October 16.

The state challenged Fidelity's historical withdrawal restrictions, asserting that they were unlawful. Fidelity, however, disputes this conclusion, claiming that it was awaiting permission from the New York Department of Financial Services to enable external withdrawals, which was granted in April 2025.

The core issue revolves around the rights of cryptocurrency buyers, particularly whether purchasing through an app equates to having the ability to withdraw the assets. California's commodity rules stipulate that certain transactions must involve physical delivery within a specified timeframe, which includes the ability for buyers to transfer their assets away from the dealer.

This settlement is part of a broader regulatory discussion regarding customer rights when purchasing cryptocurrencies through traditional financial services. While the settlement amount is relatively minor for a company of Fidelity's size, the implications for customer control over their holdings are significant. Investors are advised to verify withdrawal capabilities and account terms before assuming uniformity across Fidelity's products.