Coinbase Global Inc. (COIN) shares climbed 5.4% in extended Wednesday trade to $312.40 as Bitwise launched the lowest-fee spot Ethereum exchange-traded fund yet — the Bitwise Ethereum ETF (ETHB) at a 0.13% expense ratio — and the U.S. Securities and Exchange Commission separately approved the firm's 19b-4 amendment allowing in-kind creation and redemption for spot ETH products.
The Bitwise launch ignited a fresh round of competitive fee compression. BlackRock's iShares Ethereum Trust (ETHA) — the segment leader at $7.8 billion of AUM — has a 0.25% expense ratio. Fidelity's Ethereum Fund (FETH) charges 0.25%. Following the Bitwise move, the volume-weighted average expense ratio across the eight U.S. spot ETH ETFs dropped to 0.21%, down from 0.27% as recently as January. Total spot ETH ETF AUM stood at $14.6 billion as of Wednesday's close.
In-Kind Mechanism Reduces Tracking Error
The SEC's in-kind approval — coming after a 14-month review process — allows authorized participants to deliver Ethereum directly when creating ETF shares, rather than only cash. The change reduces tracking error and is expected to compress bid-offer spreads to within 2 basis points of net asset value, comparable to the spot Bitcoin ETF complex. Six of the eight spot ETH issuers (BlackRock, Fidelity, Bitwise, Franklin Templeton, 21Shares, VanEck) have indicated readiness to begin in-kind operations on Friday.
Coinbase is the custodian for approximately 81% of all U.S. spot Bitcoin and Ethereum ETF assets — an exclusive concentration that ties the company's revenue closely to spot crypto AUM. Q4 2025 custody-fee revenue was $66 million, up from $42 million in Q3. Coinbase Q1 2026 results are scheduled for May 7 after the close. CFRA analyst Alicia Reese estimated the fee-war intensification "should lift custody fee revenue to $86 million in Q1 from continued AUM growth, more than offsetting the modest fee compression at the Coinbase exchange-fee level."