(In paragraph 18 Galaxy Research is re-described as the research division of Galaxy Asset Management)

By Hannah Lang and Suzanne McGee

(Reuters) – U.S. exchange-traded funds (ETFs) linked to the price of ether made a sturdy debut on Tuesday, with shares in the products changing value by $1.07 billion, according to data from CF Benchmarks, a digital asset index provider, Bitwise Asset Management and traders.

According to Bitwise, the most actively traded ETFs were Grayscale’s Trust with a turnover of over $450 million, the iShares Ethereum Trust with a turnover of around $245 million, and the Fidelity Advantage Ether ETF with a turnover of $137 million.

On Tuesday, sales of products from Franklin Templeton, VanEck, Bitwise, 21Shares and Invesco/Galaxy also began.

Following the launch of nine U.S. bitcoin-based ETFs in January, ether products represent another success in the cryptocurrency industry’s campaign to bring digital assets into the mainstream. But analysts say the products are unlikely to attract as much inflow.

Trading volumes on Tuesday were below the $4.6 billion traded in bitcoin ETFs when they debuted in January. Data on inflows into ether ETFs will be available from Wednesday morning.

“Although Ethereum ETFs do not attract as much inflow of funds as Bitcoin ETFs, they are an important step in the development of the cryptocurrency market,” said Grzegorz Drożdż, market analyst at investment firm Conotoxia Ltd.

The price of ether, the world’s second-largest cryptocurrency after bitcoin, fell on Tuesday, dragging down the prices of modern ETFs, according to CoinGecko, a cryptocurrency data firm. At market close, ether was trading at $3,486.75, according to CoinGecko.

Market participants view the introduction of ETFs as a significant step towards classifying ether as a commodity rather than a security.

While the Securities and Exchange Commission has not explicitly stated that ether is a commodity, the modern products are defined as commodity-based trusts in reporting documents.

The debut adds “legitimacy” to the cryptocurrency market, Cristiano Ventricelli, senior digital assets analyst at Moody’s (NYSE:) Ratings, wrote in a Tuesday report, adding that crypto ETFs will aid enhance market stability and reduce volatility.

The launch of bitcoin-based ETFs was the culmination of a decade-long dispute with the SEC, which rejected the products over concerns about market manipulation.

The agency was forced to approve ETFs after losing a lawsuit brought by digital asset manager Grayscale Investments, although it warned at the time of approval that the products were still very risky.

The product launch has proven to be one of the most successful in ETF history, with the products attracting $33.1 billion in net inflows in June, according to Morningstar Direct.

ETF issuers competed fiercely for fees, with many firms offering to waive fees entirely for a period of time.

Ether ETF fees range from 0.19% for Franklin Templeton Ether ETFs to 2.5% for Grayscale Ether ETFs, which are converted to ETFs, according to the IPO documents. The remaining groups are around 0.25%.

Overall, fees are comparable to those for bitcoin products, although issuers offer fewer waivers.

Grayscale has launched a “mini” version of its Ether ETF with a commission of just 0.15%.

While estimates of demand for ether products vary widely, Galaxy Research, whose research arm Galaxy Asset Management owns an ether ETF at Invesco, forecasts they could attract monthly capital inflows of $1 billion.

Matteo Greco, research analyst at Fineqia International, wrote in a note that demand for Ether ETFs will be key to determining investor interest in digital assets other than bitcoin.

A significant concern for some investors is the SEC’s exclusion of the “staking” mechanism in ethereum ETFs, a key feature of the ethereum blockchain that allows users to lock up their tokens for a set period of time in exchange for income. As currently constructed, the SEC will only allow ETFs to hold regular, unstakeable ether.

Issuers began filing for ether ETFs in September. Initially, executives had little hope that the SEC would approve the products, but the agency surprised the industry in May when it approved the first necessary rule changes.

SEC Chairman Gary Gensler told Reuters last month that the Grayscale ruling influenced his decision to approve Ethernet products because the underlying market circumstances were similar.