The price of bitcoin 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 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 application.

A bitcoin ETF would allow investors to have exposure to the digital asset without actually owning it.

Major crypto tokens surged on the news. Bitcoin prices, which have been especially volatile in recent weeks, rose about 5% to $27,445. Bitcoin is up some 65% this year, though remains far off its late-2021 high above $68,000.

— This story is developing. It will be updated.