The value of crypto assets surged Tuesday after a US court cleared a path for the nation’s first bitcoin exchange-traded fund. The ruling is a breakthrough moment for crypto investors and a setback for the Securities and Exchange Commission, which has been trying to rein in the digital asset industry. The three-judge panel for the DC Court of Appeals overruled an SEC decision denying Grayscale Invesments permission to launch a bitcoin-focused ETF. The panel said the regulator had failed to adequately explain why it rejected the firm’s application. “The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products,” Judge Neomi Rao wrote. An SEC spokesperson said Tuesday the agency was “reviewing the court’s decision to determine next steps.” Major crypto tokens surged on the news. Bitcoin prices, which have been especially volatile in recent weeks, were up 7% to nearly $28,000. Coinbase (COIN), the largest publicly traded US crypto exchange, jumped 15%. The bitcoin fund at the center of the case, the Grayscale Bitcoin Trust, or GBTC, was up 17%. Grayscale had argued that is proposal was materially similar to other bitcoin investment products that the SEC has already approved. The two other bitcoin products, from crypto firms Valkyrie and Teucrium, hold futures contracts on the Chicago Mercantile Exchange. Grayscale had presented “uncontested evidence” that the underlying assets — bitcoin and bitcoin futures — were virtually identical, the judges wrote. The ruling opens the door to an investment product that investors have been demanding for years. A spot bitcoin ETF would allow traditional investors to have exposure to the digital asset without actually owning it. “This is a historic milestone for American investors, the Bitcoin ecosystem, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper,” Grayscale CEO Michael Sonnenshein said in a statement. “It’s incredibly exciting that we are one step closer to making a US spot Bitcoin ETF a reality.” Grayscale is one of several firms that has applied for a spot bitcoin ETF. Earlier this year, BlackRock, Fidelity and Invesco, among others, sought permission to launch their own bitcoin funds. Bitcoin is up some 65% this year, though remains far off its late-2021 high above $68,000.