The $500,000 agreement extends a legal theory California first used against Robinhood: under a 1990 state commodities law, investors who buy cryptocurrency must be able to take it with them.
By Staff Reporter
Attorney General Rob Bonta has reached a $500,000 settlement with the cryptocurrency subsidiary of Fidelity Investments, resolving allegations that the company broke California law by letting customers buy and sell digital coins on its platform but not move them anywhere else, his office announced on Friday.
According to the settlement agreement, retail customers of Fidelity Digital Asset Services in California could trade cryptocurrencies from November 2022 through April 2025 but could not transfer them off the platform to wallets of their own. The state contends that arrangement violated the California Commodity Law of 1990.
“While the cryptocurrency market may be ever-changing and shifting, California law is not. Investors have a legal right to full, unrestricted access to what they buy,” Mr. Bonta said in a statement. “By restricting cryptocurrency withdrawals, Fidelity Digital Asset Services left California investors in limbo, creating an unlawful barrier that violated our state’s commodity regulations.”
Fidelity disputes that account. The attorney general’s office said that when investigators contacted the company, it confirmed that it did not allow withdrawals and explained that it was awaiting required permission from the New York Department of Financial Services, then its primary regulator. New York granted that permission in April 2025, and the company rolled out transfers to all of its California customers by June 2025, according to the agreement. The company “disputes it violated California law,” Mr. Bonta’s office said, and in the settlement it “denies all claims of wrongdoing, damages, and liability whatsoever” and settles without admitting any violation.
A 1990 law and a 28-day rule
The case rests on a statute written long before Bitcoin existed. California’s commodity law generally prohibits contracts for commodities bought mainly for speculation or investment unless the dealer physically delivers the commodity to the buyer within 28 days of payment. In the attorney general’s reading, a cryptocurrency that counts as a commodity is “physically delivered” only once the investor can withdraw it from the dealer’s platform. A coin that can only be sold back to the platform, under that theory, was never truly delivered.
Mr. Bonta’s office first used the argument against Robinhood. In September 2024, Robinhood Crypto agreed to a $3.9 million settlement, which the state described as its first public action against a cryptocurrency company, over a period from 2018 to 2022 when its customers could not withdraw coins and had to sell them back to leave the platform. That case also involved disclosures about how Robinhood routed orders and held customer assets. The Fidelity investigation grew out of it: the attorney general’s office said it learned during the Robinhood inquiry that Fidelity’s unit had maintained a similar restriction during its first two years of operation.
What the agreement does and does not require
The Fidelity settlement is narrower than the Robinhood one, and its terms differ in instructive ways. The $500,000 is paid “in recognition of the Attorney General’s fees and costs” and in settlement of potential claims, rather than described as a penalty, as the Robinhood payment was. The agreement does not provide for restitution to customers.
The agreement records that California customers can now transfer their coins to external wallets, and it requires the company to give California customers reasonable written notice if it ever decides to stop offering that feature. It preserves the company’s ability to restrict transfers for security reasons.
It also looks ahead. The agreement says the company plans to launch its Fidelity Crypto IRA accounts in California, as it offers in other states, and it specifies that the company is not obligated to allow direct transfers out of those tax-advantaged accounts, which are governed by federal retirement-account rules. California savers who buy crypto inside such an account, in other words, should not expect the same withdrawal right the settlement affirms for ordinary brokerage accounts.
The company itself has changed since the conduct at issue. Effective Dec. 12, 2025, the settlement says, Fidelity Digital Asset Services converted into a national trust bank regulated by the federal Office of the Comptroller of the Currency, now doing business as Fidelity Digital Assets, National Association, based in Boston.
California’s widening crypto rulebook
The settlement arrives a little more than three months after California’s broader crypto regime took effect. Under the Digital Financial Assets Law, signed by Gov. Gavin Newsom in October 2023 and delayed a year by later legislation, companies that exchange, transfer or store digital assets for California residents have needed a license from the Department of Financial Protection and Innovation since July 1, 2026, unless they qualify for an exemption. The department lists “certain banks” among the exemptions; the Fidelity settlement does not address how the licensing law applies to the company under its new federal charter.
What the Fidelity and Robinhood cases show is that the attorney general is prepared to apply older, general-purpose statutes to crypto platforms alongside the new licensing regime. Together, the two agreements set out the state’s enforcement position that a California crypto investor is entitled to take possession of what he or she buys. Neither agreement was tested in court, and both companies settled without admitting a violation.
For Californians who hold digital assets through mainstream brokerages as well as crypto-native apps, the practical message from Sacramento is a simple one: if a platform sells you a coin, the attorney general’s office says, you should be able to withdraw it. The office maintains a cryptocurrency resource page with guidance for investors.
Be the first to comment