The price of bitcoin rose more than 5 per cent, climbing above $27,000, its biggest one-day rise since June

Crypto currencies soared after a federal appeals court sided with an asset manager that hopes to launch the first bitcoin exchange-traded fund (ETF) over the objections of the Securities and Exchange Commission.

The decision in favour of Grayscale Investments was a big win for the industry as it pushes for wider mainstream exposure to digital assets. It was a blow to the Securities and Exchange Commission, which is in the middle of a wider clampdown on the industry.

The price of bitcoin (BTC-USD) increased over 5 per cent, climbing above $27,000, its biggest one-day rise since June. Coinbase, the biggest crypto exchange in the US, surged over 13 per cent, while bitcoin mining firms Marathon Digital and Riot Blockchain climbed 18 per cent and 24 per cent, respectively.

Asset managers have for years been attempting to convince the Securities and Exchange Commission to approve a spot bitcoin exchange-traded fund, which would permit investors to get exposure to the world’s biggest crypto currency without having to own it. The Securities and Exchange Commission declined the various applications, contending the products were vulnerable to market manipulation.

Last year, Grayscale decided to sue the Securities and Exchange Commission after it was not permitted to convert its Grayscale Bitcoin Trust (GBTC) into a spot bitcoin offering, contending the commission had already approved exchange-traded products that hold bitcoin futures contracts and thus “acted arbitrarily and capriciously.”

A three-judge appeals panel agreed with Grayscale, saying Tuesday in its decision that Grayscale “advanced substantial evidence” its product was similar to Bitcoin futures exchange-traded funds approved by the Securities and Exchange Commission.

The denial of Grayscale’s proposal was arbitrary and capricious as the Commission failed to explain its different treatment of similar products, Judge Neomi Rao said in the opinion.

The decision could strengthen the chances for other asset managers to win approval for their products. The world’s biggest money manager, BlackRock, filed paperwork with the Securities and Exchange Commission in June to create a spot bitcoin ETF. Coinbase would be the custodian for those bitcoin holdings.

To our mind there is no doubt now spot BTC exchange-traded funds are coming to the US, said Tim Bevan, founder and Chief Executive Officer of UK-based crypto financial services firm ETC Group. The level of pent-up institutional and retail demand in the US is considerable.

The Securities and Exchange Commission said Tuesday that it is evaluating the new court decision and will decide on its next steps. A Grayscale spokesperson said, the Grayscale team and our legal advisors are actively evaluating the details outlined in the court’s opinion and will be pursuing next steps with the SEC.