U.S. exchange-traded funds (ETFs) tied to the price of ether enjoyed a strong debut on Tuesday, with $1.07 billion of shares changing hands in the products, according to CF Benchmarks, a digital asset index provider, Bitwise Asset Management and traders.

The most actively traded ETFs were Grayscale's Ethereum Trust, with more than $450 million in turnover, the iShares Ethereum Trust, with about $245 million in trading, and Fidelity Advantage Ether ETF, with $137 million, Bitwise said.

Products from Franklin Templeton, VanEck, Bitwise, 21Shares and Invesco also began trading on Tuesday.

Following the launch of nine U.S. spot bitcoin ETFs in January, the ether products mark another win for the cryptocurrency industry's campaign to push digital assets into the mainstream, although the products are unlikely to garner the same volume of inflows, analysts said.

Tuesday's trading volumes fell short of the $4.6 billion traded in the bitcoin ETFs on their January debut. Data on ether ETF inflows will be available as of Wednesday morning.

"Although ether ETFs may not attract as much inflow as bitcoin ETFs, they represent an important step in the development of the cryptocurrency market," said Grzegorz Drozdz, market analyst at investment firm Conotoxia Ltd.

The price of ether, the world's second-largest cryptocurrency after bitcoin, trended lower on Tuesday, pulling down the prices of the new ETFs, according to CoinGecko, a cryptocurrency data firm. After market close, ether was trading flat at $3,486.75, according to CoinGecko.

Market participants see the introduction of the ETFs as significant for the industry's longstanding effort to classify ether as a commodity rather than a security.

While the Securities and Exchange Commission has not explicitly said ether is a commodity, the new products are defined in filing documents as commodity-based trusts.

The debut enhances the cryptocurrency market's "legitimacy", said Cristiano Ventricelli, senior analyst of digital assets at Moody's Ratings, wrote in a Tuesday report, adding the crypto ETFs would help boost market stability and reduce volatility.

The bitcoin ETF launches were the culmination of a decade-long tussle with the SEC, which had rejected the products due to market manipulation concerns.

The agency was forced to green-light the ETFs after losing a court challenge brought by digital asset manager Grayscale Investments, although it warned when approving them that the products were still highly risky.

The launch was one of the most successful in the ETF market's history with the products attracting $33.1 billion in net inflows as of June, according to Morningstar Direct data.

Bitcoin ETF issuers competed hard on fees, with many firms offering to waive fees entirely for a certain period of time.

The ether ETF fees range from 0.19% for Franklin Templeton's ether ETF to a high of 2.5% for Grayscale's ether trust, which it is converting into an ETF, according to their public offering documents. The rest cluster around 0.25%.

Overall, the fees are comparable to the bitcoin products, although issuers are offering fewer waivers.

Grayscale rolled out a "mini" version of its ether ETF with a fee of only 0.15%.

While estimates on demand for the ether products vary widely, Galaxy Research - whose sister company Galaxy Asset Management has a pending ether ETF with Invesco - has projected that they could attract monthly inflows of $1 billion.

Matteo Greco, research analyst at Fineqia International, wrote in a note that demand for the ether ETFs will be crucial in ascertaining investor appetite for digital assets beyond bitcoin.

A major issue for some investors is the SEC's exclusion of the "staking" mechanism in the ether ETFs, a key feature on the ethereum blockchain that allows users to lock up their tokens for a certain period of time in exchange for yield. As currently constructed, the SEC will only allow the ETFs to hold regular, unstaked ether.

Issuers began filing for the ether ETFs in September. Executives initially had low hopes that the SEC would approve the products, but the agency surprised the industry in May when it approved the first rule changes needed.

SEC Chair Gary Gensler last month told Reuters the Grayscale ruling had influenced his thinking on approving the ether products, because the underlying market circumstances were similar.

(Reporting by Hannah Lang in New York and Suzanne McGee in Providence, Rhode Island; Editing by Christina Fincher and Stephen Coates)