Fidelity Digital Assets has agreed to pay $500,000 to settle a California investigation into its handling of retail crypto transfers, according to court filings unsealed on October 16. The settlement requires the firm to provide written notice to customers if it ever discontinues the transfer feature, but it does not create a compensation fund for affected users.

Attorney General Rob Bonta announced the deal after determining that Fidelity had restricted withdrawals from crypto holdings for California retail customers between November 2022 and April 2025. The restriction applied only to transfers out of the platform; buying and selling remained permitted. Transfers became fully available to all California users in June 2025 following regulatory approval.

The agreement explicitly excludes tax-advantaged accounts, including individual retirement accounts, from its transfer obligations. Fidelity’s current IRA FAQ confirms that crypto transfers remain unavailable in California and Oregon, and that customers cannot withdraw funds directly from these accounts. Instead, transfers must occur through linked brokerage IRAs, which operate under separate withdrawal rules.

Fidelity denies any legal violation and entered the settlement without admitting fault. The company retains discretion to restrict transfers for platform protection or individual account holder concerns. Its public availability page, verified on October 18, continues to list crypto deposits and withdrawals for standard Fidelity Crypto accounts in California.

The settlement reflects broader regulatory scrutiny of crypto platforms’ transfer practices, though it does not set a precedent for other states or institutions.