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RBC Analyst advices Apple to Launch own Crypto Exchange

RBC analysts’ at large banks suggests Apple develop a system that used bitcoin wallet. 

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RBC analysts’ at large banks suggests Apple develop a system that used bitcoin wallet. 

With a market capitalization of $2.3 trillion, Apple (AAPL), the maker of iPhones and tablets, is the world’s largest publicly-traded company. Tesla announced on Monday a $1.5 billion purchase of Bitcoin, one of the Wall Street analysts is calculating that whether Apple might benefit by using cryptocurrency like Tesla or not. 

Apple went cashless since the Corona pandemic started; apple provides payment wallets for customers in the critical situation of the economy. However, a report by RBC Capital Market says that Apple might easily generate $40 billion from the cryptocurrency business. The technological leader can help the US to become the leader in cryptocurrencies for the next decade or two. 

The RBC analyst, Mitch Steves, figures that the payments firm Square (SQ) generates about $1.6 billion per quarter in bitcoin-related revenue on an active install base estimated at around 30 million. He further adds “Apple’s install base is 1.5 billion, and even if assume only 200 million users would transact, this is 6.66x larger than Square,” according to the report. “Therefore, the potential revenue opportunity would be over $40 billion a year (15% incremental top-line opportunity)” however the effort “would be de minimize in our view as Square’s entire R&D budget is under $1 billion.”

 Regulations make it difficult for US customers to purchase cryptocurrency while exchanges are going down during pandemics. Analysts say that Apple could solve the regulatory and know-your-customer (KYC) challenges of cryptocurrencies if it created a closed system in which it only transfers the ownership of crypto between customers. Apple can develop an open system that uses bitcoin BTC+5.56% wallet and banking service. Bitcoin or Strike blocks chains lightning networking to minimize the cost of converting fiat to crypto. 

Apple taking this initiative will also reduce the bans on US Bitcoins, the analyst are of the view “If Apple went down this path the U.S.A. would likely acquire the most crypto assets from a global perspective. If the U.S.A. owns the most crypto assets (be it bitcoin or other assets), it would not make logical sense in our view to ban it. Furthermore, with Apple’s secure and world-class software, the U.S.A. would be able to have confidence in user information and balances if needed in the future.”

Bitcoin on Apple’s balance sheet

The analysts proposed that Apple pay for the cost of developing an Apple crypto wallet or exchange (around $500 million, per their estimates) by adding bitcoin to the tech giant’s balance sheet. Apple is advised by analysts to put a bet on Bitcoin.  

“For instance, if the firm bought $5 billion of bitcoin (20-25 days of cash flow), the price of the fundamental asset would need to rise by 10% for the firm to fully fund the entire project in the first place,” “This is a solid value suggestion in their view as the business would be funded without diluting any other projects at the firm writes analysts. 

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