Ether may require additional time to emerge from Bitcoin's shadow. Investors are displaying greater caution and division prior to the US introduction of exchange-traded funds linked to Ether's spot price on Tuesday, in contrast to the widespread excitement that accompanied Bitcoin ETFs. "It won't be as significant an event as some are portraying it to be," commented Nathan Gauvin, CEO of asset manager Gray Digital and $2 billion hedge fund Blackridge Investment Management. Trading of ETFs from nine asset managers, including BlackRock, VanEck, and Franklin Templeton, on US platforms is set to commence six months after Bitcoin ETFs were launched in January. The general expectation is that Ether ETFs will attract around 25% of Bitcoin's inflows, although Steven McClurg, head of US asset management at CoinShares, estimates this figure at only 10%. A significant concern for some investors is the SEC's exclusion of the 'staking' mechanism, a crucial feature on the Ethereum blockchain that releases Ether, the world's second-largest cryptocurrency after Bitcoin. Staking enables Ethereum users to earn rewards by locking up their Ether to secure the network, with rewards in the form of newly minted Ether tokens and portions of network transaction fees. The annual percentage yield on staking Ethereum was approximately 3.12% as of July 22, according to StakingRewards.com. Currently, the SEC permits only regular, unstaked Ether to be held by ETFs. "An institutional investor considering Ether is aware of the potential yields," noted CoinShares' McClurg. "It's akin to a bond manager purchasing a bond without the interest, which contradicts the purpose of buying bonds." The SEC views staking for tokens as an investment contract, necessitating disclosures and safeguards under US securities laws. McClurg anticipates that investors will continue to stake Ether outside an ETF to earn yields rather than incurring fees and holding it in an ETF. CoinShares, managing over $6 billion in assets, has opted to observe the situation before deciding to participate in non-staked ETFs. Gray Digital's Gauvin foresees staking being incorporated into the ETF by next year. "This is a stepping stone to that point," he stated. The firm is also abstaining from this launch but will monitor it closely. 'Like a stock without dividends' Chanchal Smadder, ETC Group's head of product, reiterated CoinShares' McClurg's sentiments, describing the ETF without staking yield as "like owning a stock without the dividend rights." ETC, with $1.4 billion in assets, is Germany's pioneer in crypto exchange-traded products (ETP), akin to ETFs, and offers both staked and unstaked Ether ETPs totaling $150 million. Demand for staked Ether ETPs surpasses that for unstaked ones, with the staked fund attracting $51 million in inflows this year, whereas the unstaked fund experienced outflows of $95 million. However, Smadder highlighted that illiquidity poses a risk when staking Ether, with validators or stakers potentially facing delays of up to eight to nine days to withdraw their staked Ether. "With unstaked Ether, it is immediately available," he explained. Nana Murugesan, president of Matter Labs, a research and development company aiding Ethereum's scalability, noted that the Ether ETFs launch is less about staking and more of a "landmark moment" in crypto. The key aspect, according to Murugesan, is investors gaining access to a blockchain supporting numerous applications. "As Ethereum and its adoption expand, the ETF's value also increases due to network effects." Overall, investors concur that Ether's inflows are unlikely to match those of Bitcoin ETFs in their initial trading week, considering Ether's smaller market capitalization of $424 billion versus Bitcoin's $1.4 trillion. Bitcoin ETFs attracted nearly $7 billion in assets within their first three weeks of trading, according to Morningstar Direct data, accumulating a net $33.1 billion in inflows by the end of June.