The court added that the irregularities occurred with a much smaller number of players, and found violations in about a third of the cases announced by FIFA, and less serious irregularities than attributed by the International Federation of Blues.
Chelsea appealed the sentence in June, and after a lengthy investigation into how Chelsea signed young players at the junior academy, FIFA announced that the club had violated Article 19 of the regulations in the case of 29 youngsters.
The Court of Arbitration for Sport has decided to accept the appeal of Chelsea, to be able to conclude deals in the next winter Mercato.
The court also reduced the fine to around 300,000 dollars.
Chelsea was banned from joining players in two transfer periods for breaking international transfer rules and registering players under 18.
Chelsea complied with the penalty in a single transfer window last summer.
"Chelsea have been punished by denying new players locally or internationally for a full transfer period and the club has already carried out the punishment in the summer of 2019," the court said in a statement.
FIFA said the London club had also violated article on agreements on young players, which allowed other clubs to be affected by transfer matters.
