The value of major cryptocurrencies surged on Tuesday following a US court decision that removes roadblocks to approving the first spot bitcoin exchange-traded fund (ETF) in the country.

The ruling from the DC Court of Appeals represents a major victory for crypto investors and industry advocates who have spent years lobbying for a spot bitcoin ETF. It also deals a setback to the Securities and Exchange Commission (SEC), which has resisted greenlighting such products.

The judges overturned the SEC's rejection of a spot Bitcoin ETF proposal from Grayscale Investments, operator of the popular Grayscale Bitcoin Trust. The court said the SEC failed to adequately explain denying Grayscale when it already approved bitcoin futures ETFs.

In response, Bitcoin rose 7% toward $28,000, while crypto exchange Coinbase jumped 15%. Grayscale's Bitcoin trust gained 17%. The highly anticipated product would allow mainstream investors to gain exposure to Bitcoin's price movements without directly owning the digital asset.

Grayscale argued its proposal was nearly identical to approved futures-based bitcoin ETFs from Valkyrie and Teucrium. The judges agreed the SEC provided no basis for rejecting Grayscale while accepting the others.

The ruling now opens the floodgates for other firms like Fidelity and BlackRock to potentially launch spot bitcoin ETFs, pending SEC review. After years of denial, the SEC must provide robust reasoning to reject any proposals similar to Grayscale's.

The long-awaited spot ETF is seen as a potential catalyst to reinvigorate investor interest and inflows into bitcoin and crypto markets more broadly. Tuesday's price rally reflects enthusiasm that the court victory could finally make these products a reality for US investors.