[Jacobi Alvarez]

In case anyone like me comes across this post with this problem, here’s what worked for me.

I was having a similar issue. I had footage of a person laying on white tiles and there was some awful banding when I used a Cross Dissolve to fade up. I also used an FS7 like the original poster.

It was WORSE when I unchecked Liner Color in Project Settings. (Other threads seem to say that can be a fix.)
It was WORSE when I used Cross Dissolves instead of Keyframing the Opacity. (Other threads seemed to agree, and it might be because the default transition has a big jump from 0-22% I’ve heard? Others may know better.)

It was FIXED:
Change Preview Settings (in Sequence Settings) to ProRes instead of whatever the default MPEG setting was.
Check Max Render and Depth in Sequence Settings (Not just export settings.)
Black Video on Top of Footage, Keyframe 100-0% for the transition
Uncheck/Don’t use Previews for export (I did this just in case.)

Alternative Fix:
I tried placing a white color matte on top of the video and inserting a Cross Dissolve at the end of the white matte and that had no issues—presumably because my footage was already mostly white-ish. I didn’t want to use this fix because I wanted to fade from black not white.

I have no idea WHY any of this is true, but that’s where I landed.